Payments on a portfolio of seasoned first-lien mortgages, which have a total principal balance of $406.8 million, will provide collateral for mortgage-backed notes from the PRET 2025-RPL4 Trust.
The collateral pool has 1,751 performing and reperforming loans, which will support about 13 tranches of notes, according to ratings analysts at Morningstar | DBRS.
The deal is expected to close on September 26, DBRS said, adding that it will repay investors through a sequential-pay structure, with notes expected to have a final maturity date of March 2065.
DBRS says the mortgage loans have 134 months of seasoning, and almost all of them, 91.7% of the loans, are current. Meanwhile, 8.3% of the assets are 30 days delinquent, the rating agency said.
In other pool characteristics, 63.8% of the assets in the pool are modified loans. The rating agency estimates that for 92.6% of those loans, the modifications happened more than two years ago. A small amount of the assets, 489 mortgages, have an aggregate non-interest-bearing deferred amount of $18.3 million, and accounts for 4.5% of the total principal balance, DBRS said.
Selene Finance will service all the underlying loans, DBRS said. In the case of a delinquency, no principal and interest will be advanced on any mortgages, the rating agency said. The servicer is expected to make advances in respect of homeowners association feed in so-called super lien states, however. Also, in some cases taxes and insurance will be paid.
Among the deal's credit strengths is an issuer-provided combined loan-to-value (CLTV) is 52.7%. Also, the portfolio underwent a comprehensive, third-party due diligence review centered around factors including regulatory compliance, servicing comments and data integrity.
The loans have an average balance of $232,368, and a weighted average (WA) coupon of 4.7%, and borrowers have a FICO score of 673 on a WA basis.
There is an almost equal balance between loans for property purchases and cash-out refinances, at 45.3% and 45.4%, respectively. Slightly more than half the loans were underwritten through full documentation, DBRS said.
DBRS assigned ratings of AAA to the A1 notes; AA to the A2 and A3 notes; A to the A4 and the M1 notes; BBB to the A5 and M2 notes; BB to the B1 notes; and B to the B2 notes.
