A pool of 928 PennyMac originated and serviced residential mortgages will secure $346.6 million in residential mortgage-backed securities (RMBS), offered through the PMT Loan Trust 2025-INV1.
The first-lien and fixed-rate residential mortgage loans are of prime quality, with a weighted average (WA) FICO score of 779, and an original loan-to-value (LTV) ratio of 73.2%, according to Moody's Ratings. But the pool also has a high exposure to mortgages on investment properties, 83.7%, and has a significant concentration in California, which are potential credit challenges.
Just 2.15% of the loans in the pool financed properties in Los Angeles County, and the surrounding areas that have been impacted by the recent wildfires that started earlier this month.
Moody's said it would not make additional adjustments for the affected loans, because a representation and warranty is covering no material damage to the properties as of the deal's closing. Should any properties be found to be damaged, they will likely be repurchased and removed from the pool, the rating agency said.
Otherwise, Moody's deems the geographic concentration as high in the portfolio, with 16.9% of mortgages originated on California-based properties. After the state level, the high concentration level extends to metropolitan areas, too, particularly Los Angeles-Long Beach-Anaheim, accounting for 4.6%, and the Riverside-San Bernardino-Ontario area, with 2.3%.
The transaction includes a senior subordination floor of 1.00% of the initial pool balance, and a subordination lockout amount equaling 1.00% of the initial pool balance, among the deal's credit strengths. The senior support class of notes will not receive any principal payments after the credit support depletion date. Also, all principal payments need to be made to the super-senior classes.
While the deal has no master servicer, considered a potential weakness, but the servicer PennyMac is strong.
Moody's assigned ratings of Aaa to A1 through A-27; Aa1 through A-X1; Aaa on A-X2 through A-X27; and Aa1 on A-X30 through A-X33. Classes B1, B2, B3, B4 and B5 received ratings of Aa3, A2, Baa3, Ba3 and B3, respectively.
