A pool of 317 prime, high-balance mortgages—namely agency and non-agency loans—will secure the $305.7 million OBX 2023-J1 transaction.
BofA Securities is the initial note purchaser, overseeing a deal that sponsored by Onslow Bay Financial. The trust will issue notes through a senior-subordinate, shifting interest structure, according to the Kroll Bond Rating Agency and Moody's Investor's Service. The deal is slated to close on February 23.
All of the loans in the pool are qualified mortgages, under QM Safe Harbor (95.3%) or QM Agency Safe Harbor. The mortgages are of prime quality, with original FICO scores of 772 on a weighted average (WA) basis, and virtually all of them are financing primary residences, according to KBRA.
The top mortgage providers in the pool originated 53.2% of the collateral, according to KBRA. United Shore Financial Services accounts for 25.1% of the pool; MAXEX Clearing accounts for 18.5% and Fairway provided 9.6% of the home loans in the pool. On average the loans, which are fixed-rate, have a balance of $964,526, and range from $34,778 to $2.4 million. On a weighted average (WA) basis, the loans have an original loan-to-value (LTV) ratio of 72.4%.
California accounts for the largest percentage of loans in the pool balance, at 28.0%, which Moody's sees as a credit challenge. Florida and Texas follow with 11.2% and 7.8%, respectively, according to KBRA. Los Angeles and San Francisco account for the CBSAs with the largest representations in the pool, with 10.0% and 5.7%.
Moody's noted other potential credit challenges specifically among borrower characteristics. For one, self-employed borrowers account for 36.2% of the loan pool's outstanding balance. Also, borrowers with multiple financed properties represent 47.9% of the pool.
Yet of 12.2% the collateral pool's balance are seasoned by more than one year.
Moody's expects to assign ratings of 'Aaa' to the A-1 through A-12 classes; 'Aa1' to classes A-13 through A-X-1; 'Aaa' on A-X-2 through A-X-7 and 'Aa1' to the A-X-8 and A-X-9 classes.
KBRA expects to assign 'AAA' to the A-6 through A-X-8; 'AA+' on the B-1 and B-X-1; 'A+' on the B-2 and B-X-2; and 'BBB+' through 'B+' on the B3 through B5 notes.
