A pool of 4,406 home loans, most of which amortize on 20-year terms, will collateralize $399.2 million in mortgage-backed securities (MBS).
The mortgages in the pool, which have one-month of seasoning on average, are fixed-rate and fully amortizing, according to Kroll Bond Rating Agency. The deal will issue notes through a structure of eight initial tranches of class A, M and B notes, and the deal also has three tranches composed of an excess cashflow piece, and two REMC residual tranches.
RCKT Mortgage Trust 2025-CES4, also has a series of exchangeable classes, KBRA said, adding that the exchangeable notes will be entitled to a proportionate share of interest and principal payments whenever they apply. They'll also be entitled to losses and write downs that can be allocated to the initial exchangeable notes.
The transaction will repay noteholders sequentially and features a step-up coupon, KBRA said.
Underwriting for the mortgages aligns with Ability to Repay Rules, which represents one of the deal's positive credit aspects, KBRA said. Credit enhancement ranges from 20.0% on the A1A notes to 0.85% on the B2 notes.
RCKT Mortgage 2025-CES4's structure gets credit enhancement from excess monthly cashflow to cover realized losses. The structural feature means that the hard support of the KBRA-rated tranches can be lower than they would be if the transaction did not use excess spread to cover losses, the rating agency said.
As servicer, Rocket Mortgage will not provide advances of delinquent principal and interest. Doing so runs the chance of intermittent cashflows to the trust. But KBRA also noted that without the advancing of interest, periods of higher delinquency levels and loan modifications will put the notes under greater liquidity stress.
On average, the loans have a balance of $90,623, with a weighted average (WA) coupon of 9.31%. The loan pool has a WA original loan-to-value ratio of 18.9%, also.
The loans have a non-zero WA annual income of $172,423 and liquid reserves of $66,021 on those same terms.
KBRA assigns AAA to the A1A and A1B tranches; AA+ to the A2 notes; A+ to the A3 notes; BBB+ to the M1 notes; BB+ to the B1 notes and B+ to the B2 notes.
