Some 302 prime jumbo residential mortgage loans will secure a pool of mortgage-backed securities (RMBS) from the Oceanview Mortgage Trust, 2022-1, with about a third of the mortgages extended to borrowers who are considered self-employed.
All of the loans in the pool are fixed-rate, fully amortizing mortgages with a majority having original terms of 30 years, to maturity, as of an apparent cutoff date of October 11, according to Kroll Bond Rating Agency, which expects to assign ratings to the notes.
BofA Securities and Stifel, Nicolaus & Co., are initial note purchasers on the deal, which will issue the notes through a senior-subordinate structure.
In a post-lockdown world, some 29.3% of the borrowers in the pool are considered self-employed, according to KBRA, a higher-than-average level compared with recent jumbo prime transactions. Self-employed borrowers were more severely affected by the pandemic due to business closures and other forms of lockdowns, but loan performances have been positive to date, KBRA said it expects that risk to be mitigated.
KBRA says it expects to assign ratings of 'AAA' to the super senior A-6, A-15 and A-18 tranche of initial exchangeable notes, which also benefit from 15% of initial credit enhancement. It also expects to assign 'AA+' to the A-21 class of notes; 'AAA' to a series of notional, initial exchangeable senior notes; and 'AA' through 'B' on the B-1 through B-6 subordinate notes.
Other than the concentration of self-employed borrowers, the pool exhibits plenty of prime borrower characteristics. For one, borrowers in OCMT 2022-1 had significant liquid reserves of $366,500, and high residual income compared with borrowers in other recent jumbo transactions.
All of the mortgages are qualified, KBRA found.
Also, while jumbo mortgages are typically originated in states with high home prices, the pool manages to be geographically diversified, KBRA noted. California accounts for the largest percentage by pool balance, 35.7%. Washington, Arizona, Colorado and Oregon follow, accounting for 13.6%, 6.2%, 5.0% and 4.5%, respectively.
