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Shellpoint Partners readies $323M prime jumbo RMBS

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Shellpoint Partners is marketing its prime jumbo mortgage securitization of the year, according to rating agency presale reports.

Like the sponsor’s previous two offerings, completed in March and October, a large percentage of the collateral was sourced through a bulk acquisition from Bank of America. The total number of originators is 17.

Shellpoint Co-Originator Trust 2017-2 is backed by 459 mortgage loans and an unpaid principal balance of $323,377,050. Since origination, the loans in the pool have performed well with no 60-plus day delinquencies. There were four loans with 30-day delinquency history, which were attributed to servicing transfer. These loans all cured as of the cutoff date.

The borrowers have high credit scores, large amounts of equity in their homes and significant liquid reserves. The weighted average original FICO score is 773 and only 0.9% of borrowers have original FICO scores less than or equal to 700. The weighted average original loan-to-value ratio is 69.9% and 19.7% of borrowers have original LTV ratios less than or equal to 60.0%.

The pool weaknesses include large proportions of self-employed borrowers and refinance loans as well as high geographic concentration. Just over a fifth of borrowers (21.4%) are self-employed and 18.0% of the loans are rate/term refinance loans, 8.7% are cash-out refinance loans and 3.9% are debt consolidation loans. Historically, refinance loans have defaulted at higher rates than purchase loans, according to Moody’s Investors Service.

Also, 41.1% of the loans are in California, exposing investors to an economic downturn in that state.

Although loans backed by properties located in Texas and Florida make up 10.7% of the pool, the transaction has minimal exposure to the areas affected by the recent hurricanes in Texas and Florida, per Moody’s.

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