New Residential is marketing another $301 million securitization of re-performing mortgage loans, according to Moody's Investors Service.
The real estate investment trust acquires loans by exercising “cleanup calls” on private label mortgage securitizations. As a servicer, it has the right to dissolve these trusts when at least 90% of the collateral has been paid down, making the deals uneconomical to service. When calls are exercised, the performing loans are sold to New Residential's own securitization trust and the REIT holds the nonperforming loans on its balance sheet.
The pool of loans backing New Residential Mortgage Loan Trust 2016-2 have weighted average current loan to value ratio of 56.9%, suggesting borrowers have . The loans are also seasoning by 154 months, and a large percentage, 95.6%, pay fixed rates of interest. Moreover, approximately 79.8%, by balance, have never been modified and approximately 20.2% were previously modified but are currently performing.
Borrowers in the pool have less equity in their homes than those in two deals New Residential completed in 2015; the percentage of previously modified loans is also higher. However both metrics are lower than in the New Residential's previous deal, completed in March of this year.
Nationstar Mortgage will service 9.4% of the loans underlying the pool, Ocwen Loan Servicing will service 60%, Specialized Loan Servicing will service 16.6%, and PNC Bank will service 14%. Nationstar Mortgage will also serve as a master servicer of the transaction.
Moody’s has assigned ‘Aaa’ ratings to the senior tranches of notes to be issued by the deal.