Onslow Bay Financial is preparing to issue $342.6 million in residential mortgage-backed securities (RMBS) through the OBX 2026-AHC4 Trust,
A pool of 626 prime, agency-eligible mortgages will secure the notes, which will be issued through a series of class A and B exchangeable and interest-only notes, according to analysts at Kroll Bond Rating Agency.
OBX 2026-AHC4 is expected to pay coupons ranging from 0.50% on the interest-only, exchangeable tranches to 6.30% on senior exchangeable notes, KBRA said.
The super senior notes, tranches A1 through AF1, benefit from 15.00% in credit enhancement, according to KBRA. Classes A19 through A25 benefit from 5.15% in credit enhancement, analysts said. Enhancement did not apply to the interest-only, exchangeable notes, analysts said. KBRA assigns AAA ratings to all those notes. The AA-rated, B1 notes benefit from 3.40% in credit enhancement.
The transaction will repay noteholders on a senior-subordinate and shifting interest basis, KBRA said.
Initial purchasers on the deal, slated to close on August 31, includes BofA Securities, J.P. Morgan Securities and Morgan Stanley. The notes have a final maturity date of September 2056.
OBX 2026-AHC4 includes a 120-day stop advance provision, KBRA said, which prohibits the advancing party from forwarding any principal and interest on loans that are delinquent by 120 days or more. This could potentially reduce funds that are available relative to the Interest Payment Amount, potentially creating shortfall in interest or principal write-downs to the most subordinate classes, KBRA said.
AmeriHome Mortgage originated the entire underlying pool and will service them, according to the rating agency.
On average, the mortgages have a balance of $547,412. Just 11.5% of borrowers in the pool are self-employed, and overall borrowers have a non-zero weighted average annual income of $256,328. Also, they have liquid reserves of $491,161.
The pool is also geographically diverse, with California, Texas, New Jersey, Georgia and Tennessee accounting for 15.6%, 9.5%, 7.7%, 6.1% and 4.3%, respectively.
The pool appears to be diversified, as the top five mortgages account for 1.7% of the pool, KBRA said.
