A pool of 1,623 primarily fixed-rate, non-prime residential mortgages will back approximately $1 billion in residential mortgage-backed securities to be issued through the OBX 2026-NQM13 Trust.
Onslow Bay Financial's latest securitization, backed mainly by non-qualified or exempt mortgages, will offer 13 classes of mortgage-backed notes, according to Kroll Bond Rating Agency (KBRA).
The rating agency reports that 94.6% of the loans are fixed-rate, while 5.4% are hybrid adjustable-rate. Of the pool, 40.1% are non-qualified mortgages (Non-QM) and 45.1% are exempt from federal Ability-to-Repay/Qualified Mortgage (ATR/QM) rules, largely because they are investor-purpose loans or originated for non-consumer loan purposes.
KBRA did not compare OBX's most recent transaction under this trust, OBX 2026-NQM12, because the collateral pool differs. Instead, it compared OBX 2026-NQM13 to two earlier deals, OBX 2026-NQM11 and OBX 2026-NQM10. All three deals had the largest geographical concentration of loans in California.
KBRA also noted that approximately 81.7% of the loans in the pool were originated using alternative or non-traditional income documentation.
Roughly 42.3% of the subject pool is backed by investment properties and 34.3% were underwritten to debt service coverage ratios (DSCR). KBRA said the DSCR loans qualified based on the ratio of actual income from existing leases, or projected income from appraiser rent surveys, to the borrowers' debt and expenses.
The rating agency cited the deal's moderate leverage, noting that the mortgages backing OBX 2026-NQM13 show meaningful borrower equity. This is evidenced by the pool's 68% weighted average original combined loan-to-value ratio. "This level of equity provides a margin of safety against potential home price declines," KBRA stated.
No originators made up more than 10% of the pool. Various institutions originated the loans backing the transaction, many of which are comparatively small, unrated entities. KBRA explained that while loan-seller diversification can limit exposure to any single entity, it can also lead to greater exposure to a wider range of underwriting standards and processes applied to the loan pool.
Onslow Bay Financial, formed in July 2013, operates as a wholly owned subsidiary of Annaly Capital Management, the country's largest publicly traded mortgage REIT.
