Sequoia Mortgage Trust, series 2023-5 is preparing to issue $340.1 million in residential mortgage-backed securities (RMBS) from a revenue stream comprised of 317 residential mortgage loans.
The pool is comprised of prime, jumbo mortgage loans, which are also fully amortizing fixed-rate mortgages with 30-year maturity terms, according to the Kroll Bond Rating Agency, which will assign ratings to the notes. The transaction will issue notes through 18 tranches, according to KBRA.
J.P.Morgan Securities is the sole bookrunner, while Stifel is the co-manager on Sequoia 2023-5, according to KBRA, which will repay investors through a sequential waterfall of super-senior, senior and subordinate structure, the rating agency said. Three super-senior notes have the same credit enhancement level, 15.00%, while the A21 senior support note class benefits from 5.00% of credit enhancement. The deal is slated to close on November 17.
KBRA expects to assign ratings of 'AAA' from the A9 notes through AIO22; 'AA-' on the B1 notes; 'A-' on the B2 notes and 'BBB-' and 'BB-' on the B3 and B4 notes, respectively.
Rocket Mortgages accounts for the largest percentage of the pool balance, 20.9%, which suggests diversified loan contributors to the pool. Further, Select Portfolio Servicing (SPS) will service all of the underlying mortgages, which KBRA sees as decisively positive. Redwood Residential Acquisition Corp. (RRAC) will retail servicing rights on SPS's subserviced loans.
On average, the supporting mortgages—all of which are first liens—have an average balance of $1 million. On a weighted average (WA) basis, the loans have an original term of 360 months, an original credit score of 774 and an original loan-to-value ratio of 72.3%, the rating agency said.
On a non-zero, WA basis the borrowers have an annual income of $492,088 and liquid reserves of $557,294.
When it comes to a breakdown by state, the pool is highly diversified geographically, KBRA said. California accounts for 33.6% of the pool balance, while Washington accounts for 19.0% of the pool.
