A pool of 1,262 primarily fixed-rate residential mortgages will provide collateral for $705.5 million in residential mortgage-backed securities (RMBS), coming to market through the OBX 2025-NQM16 Trust.
Onslow Bay Financial's latest securitization backed by a pool of majority non-qualified or exempt mortgages will sell notes through 13 tranches of class A, M and B notes, according to the Kroll Bond Rating Agency.
Specific data on pricing was unavailable at press time for the OBX 2025-NQM16 transaction, but a previous OBX Trust, also collateralized by non-QM mortgage collateral, and that came to market with a similar capital structure, offered a coupon of 5.28% on the AAA-rated A1A notes, and 6.74% on the B1 notes, rated BB- by KBRA.
OBX will repay senior-note investors on pro rata basis, while the mezzanine and subordinate notes will repay investors sequentially, KBRA said.
Morgan Stanley is among a list of initial purchasers, including Santander US Capitl Markets, Hilltop Securities and Stifel Nicolaus.
The A1A notes benefit from credit enhancement levels that equal 30% of the note balance in that tranche, according to KBRA, while credit enhancement on the rest of the classes range from 20.0% on the A1B tranche to 0.10% on the B2 class of notes, KBRA said.
September 18 is the expected closing date for the deal, which will repay investors through a modified payment structure, and has a credit enhancement structure that uses excess spread. The notes have an expected final maturity of August 2065, KBRA said.
OBX's underlying collateral has moderate leverage, with a weighted average (WA) original loan-to-value ratio of 68.1%, KBRA said. A substantial percentage of borrowers, 46.0%, are self-employed.
A large majority of the mortgages were underwritten without full documentation, which meant a combination of debt service coverage ratio, bank statement, profit and loss, and written VOE. The pool's debt-to-income ratio, on a WA basis, is 37.7%, the rating agency said.
As for the type of products comprising the pool, most of them are 30-year (89.6%) and fully amortizing (88.2%) home loans, the rating agency said. KBRA assigns ratings of AAA to the A1A through A1IO tranches; AA+ to the A2 notes; A+ to the A3 notes; BBB+ to the M1 notes; BB- to the B1 notes; and B- to the B2 notes.
