A pool of prime, fixed-rate, long-term residential mortgage-backed securities are on the way to market from OBX 2021-J1 Trust, which will offer investors a chance at $300 million in notes highly rated virtually throughout the deal.
Onslow Bay Financial acquired the mortgages, from various originators, from Bank of America National Association, according to FitchRatings. Borrowers of the pool’s underlying loans have strong credit profiles, with weighted average original FICO scores of 776, and about 65% of the loans have a borrower with an original FICO score above or equal to 750.
Further, the weighted average combined loan-to-value ratio of 63% represents substantial borrowers in the mortgaged property and a reduced risk of default. Most of the mortgages are financing single-family homes, 96.7%; 3.1% are on condominiums; and the rest are on multifamily properties.
The deal did incur a geographic concentration penalty of 1.02x probability of default, as 43.9% of the pool is concentrated in California, and San Francisco accounts for the largest MSA concentration, 16%.
Continuing an industry shift that began with the
A substantial portion of the notes in the deal is rated ‘AAA,’ from Fitch. Two junior classes are rated ‘AA;’ and another two are rated ‘A.’ One $1.95 million subordinate class is rated ‘BBB;’ a $1.2 million class is rated ‘BB;’ and a $530 million class is ‘B.’ Two classes at the bottom of the waterfall are not rated.
Bank of America Securities is the lead underwriter on the transaction.
