MFA Financial is sponsoring $305 million in mortgage-backed securities (MBS), backed by 515 non-prime mortgages originated by Citadel Servicing, FundLoans Capital and Planet Home Lending.
MFA 2025-NQM1 Trust will sell notes through 10 tranches of class A, M and B notes, which have a March 2070 maturity date, according to Fitch Ratings. The capital structure includes an interest-only piece representing 10.5% of the pool balance, Fitch said, plus subordination from class X certificates. Otherwise, fixed-rate mortgages account for almost all the assets in the pool.
Atlas SP Securities is among the group of lead underwriters, which includes Barclays Capital and
The deal will repay investors through a hybrid sequential structure, where the principal will be distributed pro rata to the senior certificates, while shutting out the subordinate bonds from principal until the balances in all the senior classes are completely paid down. Cumulative loss and delinquency event triggers are in place to ensure cashflow to the senior notes. If those boundaries are breached, the A1, A2 and A3 tranches will receive principal payments sequentially until they are reduced to zero.
Excess cash flow will pay timely interest and protect against realized losses in the rated certificates before being paid out to the class X notes, Fitch said. With net weighted average coupon of 7.22%, MFA 2025-NQM1 gets about 1.36% of excess spread on WA basis for the bonds at issuance, the rating agency said.
All the assets received third-party due diligence from firms including Canopy, Clayton and Consolidated Analytics, among others.
On average, the loans have a balance of $592,307, which have an original loan-to-value (LTV) ratio of 67.6%, and borrowers have a WA model FICO score of 731, according to Fitch. The assets also have a debt-to-income ratio of 42.2%, Fitch said.
A slight majority of the mortgages in the pool, 51.1%, are for purchases, with 36.8%, dedicated to cash-out transactions.
Fitch assigns AAA, AA and A to the A1, A2 and A3 notes, respectively. The M1 class received a BBB- rating; and the B1 and B2 notes received ratings of BB- and B-, respectively.
