Rate Mortgage Trust is coming to market with its second issue of prime jumbo U.S. residential mortgage-backed securities this year.
The collateral for RATE Mortgage Trust 2025-J2 (RATE 2025-J2) comprises 308 mortgage loans to prime borrowers. The loans are first-lien mortgages with a total principal balance of $344.5 million. These are fully amortizing fixed-rate mortgages (FRMs) with original terms to maturity of 30 years and a weighted-average (WA) loan age of two months, according to Morningstar DBRS.
The sponsor, Guaranteed Rate, began issuing prime jumbo securitizations from its RATE shelf in early 2021 and this transaction represents its eleventh prime jumbo RATE deal, DBRS said.
Guaranteed Rate originated all the mortgage loans and is also the servicing administrator. The loans will be serviced by ServiceMac, with Computershare Trust Company as master servicer, loan agent, paying agent, note registrar, and certificate registrar. Deutsche Bank National Trust Company will act as the custodian, and Wilmington Savings Fund Society will serve as trustee.
The notes' initial purchasers are BofA Securities, J.P. Morgan Securities, Goldman Sachs & Co., and
The portfolio has a strong loan quality, with weighted average original FICO of 787, low debt-to-income ratio and significant liquid cash reserves, according to Moody's Ratings. Credit challenges include high geographic concentration (23.2% originated in California), and an uncertain policy environment that could affect household finances, the ratings agency said.
Weighted average original combined LTV (CLTV) of 73.6% suggests that borrowers have considerable equity in their homes, according to DBRS calculations. There are no second liens included in this pool.
The notes consist of super senior tranches that benefit from additional protection from the senior support notes, as well as interest-only notes, and exchangeable notes.
The transaction has a shifting interest structure that pays senior and subordinate classes their pro rata share of borrower scheduled principal payments, but locks out subordinate classes from receiving any unscheduled principal prepayments for the first five years, Moody's said.
The classes A-1 to A-25 notes have credit enhancement provided by subordinated certificates. They pay interest of between 5% and 6.26%, and are rated AAA by DBRS and Moody's.
The Classes A-X-1 to A-X-26 interest-only notes are rated AAA by DBRS and Moody's (except for A-X-20 to A-X-22, that are rated AA1 by Moody's).
The issue also includes ten classes of B notes.
