Guaranteed Rate has returned to the capital markets to sponsor a $360.3 million securitization of revenue from a pool of prime, jumbo, fixed-rate mortgages that the company originated.
The transaction, RATE Mortgage Trust 2026-J2. Will pay principal and interest to noteholders following a senior-subordinate basis, following a shifting-interest structure, according to analysts at Fitch Ratings and Morningstar DBRS.
Notes from the A1 through A30 tranches will pay rates ranging from 4.00% to 5.59%, according to DBRS. The deal also includes a series of exchangeable notes that will pay variable rates, according to the rating agencies.
DBRS notes that classes A1 through A18, and A27 through A30 benefit from credit enhancement levels of 15.00%. The A19 through A26 notes have credit enhancements equaling 3.70% of the outstanding notes.
Outside of the senior notes, credit enhancement includes 2.00% on the B1 and B1A notes and B2 and B2A have enhancement that represent 1.30% of the note amount.
Fitch says the notes have a July 2056 scheduled final maturity date.
It also noted the asset pool has several stronger characteristics compared with similar transactions. For one, its origination probability of default (PD) was 6.4% overall, and 0.8% among the 'AAAsf' and 'Bsf' notes, Fitch said.
There is also a loss severity of 34.4% in the 'AAA' rating level, the rating agency said.
The 290 fixed-rate, clean-current loans in the pool have an average balance of $1.2 million, with a weighted average (WA) coupon of 6.1%. Leverage is also moderate, with a WA original loan-to-value (LTV) ratio of 71.1%, Fitch said.
All the underlying borrowers are considered prime, with FICO scores of 783, an original debt-to-income ratio of 32.7%, and liquid reserves of $850,313, according to Fitch.
DBRS ratings include (P) AAA (sf) to classes A1 through A30, which includes the exchangeable notes; (P) AA (low) (sf) to the B1 and B1A notes; and (P) B (low) (sf) to class B5.
Fitch assigns AAA(EXP) sf to the A9 through A-X-28; and AA (EXP) sf through B(EXP) sf on the B-1A through B5 notes.
