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MetLife extends RMBS market reach with investment-property pool

MetLife Life Insurance is making its first foray into securitizing prime investor-owned residential properties, selling via a trust $300.6 million in bonds secured by nearly 1,000 fixed-rate investment property mortgage loans.

According to a presale reports, MetLife’s initial securitization through MetLife Securitization Trust 2020-INV1 will consist of multiple classes of notes and subordinate pass-through certificates backed by investor loans. S&P Global Ratings has issued preliminary AAA ratings to 15 Class A “super-senior,” senior and senior support notes including (including related interest-only notes).

DBRS Morningstar has assigned triple-A ratings to only six of those tranches; the rest of the Class A notes unrated by the agency. Both agencies have assigned ratings ranging from AA to single-B on the remaining subordinate notes and certificates.

MetLife acquired the pool of loans acquired from entities connected to Community Loan Servicing (formerly Bayview Loan Servicing). Community will maintain servicing rights and retention interests in the loans, according to S&P Global Ratings and DBRS Morningstar.

Although the loans are for investment properties, MetLife sponsored all of them as qualified mortgages under the Consumer Financial Protection Bureau’s ability-to-repay standards as they were underwritten to GSE guidelines, according to S&P. But as business-purpose investments, nearly all of them (897) are classified as exempt from the QM rule normally placed on owner-occupied homes.

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Another 96 are classified as safe harbor qualified/non-higher-priced mortgage loans, and another is classified as qualified/rebuttable presumption.

Most of the loans (52.6% of the pool balance) are secured by single-family residences. The rest are backed by planned-unit developments (19.3%), condominiums (16.5%) and two-to-four family homes (11.5%).

S&P notes the weighted average borrower FICO is 766 and the average current combined loan-to-value ratio is 67.4%. Most of the loans (42.1%) are located in California, with an average loan balance of $302,383.

MetLife has issued three prior securitizations through the trust since 2017, each a collateral pool of reperforming and nonperforming loans.

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