New Residential is securitizing another portfolio of residential mortgages that it acquired through “cleanup calls” on other private label deals, according to DBRS.
The real estate investment trust acquires loans when it calls securitizations that are no longer economical to service because most of the collateral has been repaid.
The latest transaction, New Residential Mortgage Loan Trust 2016-4 will be backed 2,237 loans totaling $263.9 million.
These loans are generally what DBRS characterizes as “Alt-A,” or somewhere between prime and subprime quality, with a weighted average FICO score of 678. The weighted average loan-to-value ratio is 63%, suggesting that borrowers have
“considerable” equity in their homes, especially compared to loans backing other recent securitizations.
Among other credit considerations, the loans are significantly “seasoned,” with a weighted-average age of 154 months; 91.8% of the pool is current, while 6.5% is 30 days delinquent and 1.7% is in bankruptcy. Thirty-seven percent have been modified; the modifications happened more than two years ago for 71.5% of the modified loans.
As the sponsor, New Residential Investment Corp., through a majority-owned affiliate, will acquire and retain a 5% eligible vertical interest in each class of securities to be issued in order to comply with risk retention rules.
Just under 83% of the pool is serviced by Ocwen Loan Servicing, 15.3% by Nationstar Mortgage, and 2.1% by Specialized Loan Servicing. Nationstar will also act as the Master Servicer
DBRS has assigned a preliminary triple-A to the senior tranches of notes, which benefit from 22.55% credit enhancement.
The deal comes on the heels of another reperforming residential mortgage securitization launched this week by FirstKey Mortgage.
Editor's note: The original version of this article misidentified the rating agency.