A pool of 324 prime quality mortgages, with a higher percentage of mortgages underwritten with full documentation, will fund $365.8 million in securities from the RATE Mortgage Trust 2025-J1.
RATE Mortgage includes a unique provision that says any loan that is more than 120 days delinquent becomes a stop-advance loan, a designation that prevents interest leakage to bondholders, Fitch said. Those interest amounts would have to be recovered
Before payments resume to investors, according to DBRS.
It also exposes the senior classes to potentially unrecovered interest reductions in high-stress scenarios, Fitch said.
Guaranteed Rate will have the option to repurchase any mortgage that becomes 90 to 120 days delinquent, DBRS said. RATE Mortgage also has a provision that allows it to issue classes A1L, A2L and A3L loans, which is equal to owning classes A1, A2 and A3, respectively.
The deal also includes a shifting-interest feature, where the class B certificates are locked out from any principal prepayments for the first five years, causing senior certificates to pay down faster than subordinate certificates.
Guaranteed Rate originated the mortgages and is sponsoring the deal, according to ratings analysts at Morningstar | DBRS and Fitch Ratings. The deal has one set of senior and subordinate bonds and will sell the class A and B notes through a senior-subordinate, shifting-interest structure.
Classes A1 through A18 are super-senior classes, while A19 through A21 are the senior support tranches, according to Fitch Ratings. The B classes are subordinate to the senior tranches, Fitch said.
The deal is slated to close on February 25, and all notes have a legal final maturity date of March 2055.
Fitch assigns AAA to the A9 through AX22 tranches; AA to the B1 notes; A to the B2 tranche; BBB to the B3 notes; BB to the B4 and B to the B5 notes.
DBRS assigns AAA to the A1 through A26 tranches; AA to the B1 notes; A to the B2 notes; BBB to the B3 notes; BB to the B4 notes; and B to the B5 notes.
