More than a thousand home equity investment agreements secured by first, second and third liens on residential properties will secure $141 million in mortgage-backed securities (MBS).
The mid-May deal, Point Securitization Trust, 2024-1, will offer investors notes through three tranches of class A and B notes, according to ratings analysts at DBRS Morningstar. The A1 notes account for the bulk of the note balance, at $98.3 million, and all the notes have a stated maturity date of June 2054
Nomura, Barclays, Performance Trust, East West Markets and Cantor Fitzgerald Point Securitization will repay noteholders sequentially, with senior notes having priority over the subordinate notes, according to DBRS. That subordination provides credit enhancement to the notes, as well as deposits in the reserve and redemption accounts, the rating agency said.
Deal co-sponsor Point Digital Finance originated the loans, and is on the deal as administrator and servicer, according to the rating agency.
In evaluating the assets, DBRS applied a 5% haircut to recent appraisals, which were done at 18 months prior to the cut-off date at the most, and a 10% haircut to more dated appraisals, it said. It also applied a 5% haircut to any property with a valuation of $5 million or more.
It appears that owner-occupied, single-family homes characterize the bulk of the related options, or properties tied to the transaction's underlying contracts, DBRS said. On an aggregate basis the loans $147.4 million.
Homes backing the HEI contracts have a start value of $830,000 on a weighted average (WA) basis, with a home equity investment percentage of 33.4% (and a multiple of 3.34%), according to the pre-sale report. The contracts also have a risk adjustment ratio of 17.0% and a homeowner protection cap of 18.0%, DBRS said.
California accounts for the locale with the largest share of mortgage contracts, with 35.13%, based on investment amount, according to the rating agency. Florida (14.15%) and Arizona (10.04%) follow, making up the top three states.
DBRS assigns A to the A1 tranche; BBB to the A2 tranche and BB to the B1 notes.
