MFA 2022-INV2 Trust is preparing to issue some $214.5 million in mortgage-backed securities (MBS), secured by fixed- and adjustable-rate, first-lien mortgage loans.
Some of the assets are interest-only loans, while others are amortizing, but the loans finance a range of property types, including single-family residences, two- to four-family homes, condominiums and townhomes and multifamily properties, according to S&P Global Ratings.
The securitization will finance some 888 business-purpose investor loans in the collateral pool. MFA Financial, Inc., is the sponsor and servicing administrator for the deal, which will issue notes through a senior-subordinate structure.
Excess spread preserves subordination and helps create extra credit enhancement for the notes, according to S&P. The rating agency expects to assign ratings of ‘AAA’ to ‘A’ on the A-1, A-2 and A-3 classes, respectively, which will issue $121.3 million, $22.1 million and $25.5 million, respectively, the rating agency said.
The mezzanine class, M-1, will issue $14.7 million in notes and is slated to be rated ‘BBB’. Otherwise, the B-1 and B-2 notes, issuing $10.1 million and $7.8 million, respectively, are slated to receive ratings of ‘BB’ and ‘B+’, also respectively.
The B-3, A-10-S, XS and R classes are not slated to receive ratings.
MFA 2022-INV2’s collateral pool is exclusively comprised of business-purpose investor loans, using applicable underwriting programs that rely on debt service coverage ratios (DSCRs), based on actual or estimated rents from the property, according to the rating agency.
Of note is a step-up interest feature on classes A-1, A-2 and A-3, according to S&P. Beginning in August 2026 and for each distribution date after that, the certificates will receive the sum of the applicable fixed coupon and a step-up interest rate of 1.0%, all depending on the pool’s net weighted average coupon. This, S&P analysts said, could motivate the depositor, MFRA NQM Depositor, to exercise its option to clean up the transaction.
On average, the loans have a balance of $214,499. On a weighted average basis, the loans in the pool have a cumulative loan-to-value ratio of 70.9%, the borrowers have a FICO score of 734, current rate of 5.6% and seasoning of three months.
