Onslow Bay Financial is preparing to come to market to raise $452.7 million in asset-backed securities (ABS), with a pool of first- and junior-lien revolving home equity lines of credit (HELOC) serving as collateral.
Benchmarked on the three-month Secured Overnight Financing Rate (SOFR), notes from OBX 2026-HE1 Trust will be sold through eight tranches of notes, according to Morningstar DBRS. They also have a stated maturity date of February 2056, the rating agency said.
Nomura Securities International and J.P. Morgan Securities are initial purchasers and managers, according to DBRS.
The pool is large, with 1,952 loans that have a total unpaid principal balance (UPB) of $247.5 million. Homebridge Financial Services originated the largest portion of the contracts in the pool (35.4%), followed by United Wholesale Mortgage (25.8%), Better Mortgage (14.7%) and loanDepot.com (11.3%) originated the contracts, DBRS said. Other originators each account for less than 10% of the balance in the pool.
All loans in the pool are open-HELOCs with a draw period of three, five or 10-years, as long as the borrower adheres to certain conditions. After a draw down and interest-only period, HELOC borrowers will enter a repayment period and will be barred from taking out any more funds from their line of credit.
The contracts have an average balance of $126,830, DBRS said. On a weighted average (WA) basis, they have a coupon of 8.9%, and a Morningstar-DBRS FICO score of 740, and a maximum original cumulative loan-to-value ratio of 90%, DBRS said.
Broken down by lien type, first liens and junior liens account for 197 and 1,755 of the pool, respectively, DBRS said. They have unpaid balances of $30.5 million and $217 million, with FICO scores of 747 and 740 on a WA basis. All the loans have seasoning of three months, the rating agency said. Also, borrowers have a debt-to-income ratio of 51.67%.
Subordination bolsters credit to the notes, DBRS said.
DBRS assigns AAA to the A1 notes; AA and A to the M1 and M2 tranches; and BBB, BB and B to the M3, B1 and B2 tranches, respectively.
