Sequoia Mortgage's seventh residential mortgage-backed securities (RMBS) deal this year will raise $738 million; with a collateral pool whose concentration of second homes tipped into double-digit territory for the first time this year.
Second homes account for 10.1% of Sequoia Mortgage Trust 2026-7's collateral pool, up from the 3.6% concentration in the pool of the previous deal, the SEMT 2026-6, according to analysts at the Kroll Bond Rating Agency.
Slated for a June 29 closing, the deal is expected to pay coupons ranging from 4.5% to 5.5% on the A1 through A43 tranches of the senior notes, according to KBRA. The A26 tranche, similar to previous deals, will pay a floating rate, the rating agency said.
All the notes have a final scheduled maturity of June 2056, according to analysts at Fitch Ratings.
Most of the senior notes benefit from credit enhancement levels of 15.00%, except for the A21 tranche, which has a credit enhancement level of 5.05%, the rating agency said.
The deal requires the servicer, in this case Select Portfolio Servicing, or a servicing administrator to forward advance scheduled interest and principal payments on behalf of delinquent borrowers, if it determines that the overdue amounts can be recovered, KBRA said. This allows the deal to offer full principal and interest advancing, according to the rating agency.
The 609 first-lien loans in the pool have an average balance of $1.2 million, with a weighted average (WA) coupon of, 6.19%, KBRA said. Borrowers have a non-zero WA annual income of $544,884, liquid reserves of $749,697 and a FICO score of 780, KBRA said.
Most of the underlying loans in the pool, 73.0%, were originated through agency underwriting, and 27.0% of the loans were originated using full documentation, KBRA said.
Fitch Ratings assigns AAA to the A9 through A44 tranches, AA to the B1 notes; A to the B2 notes and BBB, BB and C to classes B3, B4 and B5, respectively
KBRA assigns AAA to the A9 through A44; AA and A- to the B1 and B2 notes; and BBB, BB- and B to classes B3, B4 and B5, respectively.
