Two Harbors Investment Corp.’s next offering of residential mortgage bonds features a new kind of risk: some of the loans used as collateral failed to comply, at least initially, with a “Know Before You Owe" consumer disclosure rule that went into effect in October.

In almost every other way, the $332 million mortgages backing Agate Bay Mortgage Trust 2016-2 are consistent with the collateral for Two Harbors’ recent transactions, according to Fitch Ratings. All are 30-year, fixed-rate loans to borrowers with strong credit profiles, low leverage and large liquid reserves. The pool has a weighted average FICO score of 773 and an original combined loan-to-value ratio of 67.6%.

Subscribe Now

Access to a full range of industry content, analysis and expert commentary.

30-Day Free Trial

No credit card required. Access coverage of the securitization marketplace, including breaking news updated throughout the day.