Shellpoint is marketing another offering of private-label mortgage bonds backed primarily by loans it acquired from Bank of America, National Association, rather than loans originated by its own New Penn subsidiary.
The collateral for the $280 million Shellpoint CoOriginator Trust 2017-1 consists primarily of 30-year, fixed-rate mortgages (99.3%), with only a small percentage of 15-year floating-rate mortgages (0.1%) and seven-year, hybrid adjustable-rate mortgages (0.6%), according to Kroll Bond Rating Agency.
All of the loans were originated to borrowers with strong credit profiles and significant home equity. Borrowers possess a weighted average (WA) original credit score of 763 and a WA original loan-to-value ratio of 68%. The loans are seasoned approximately 3.9 months and all are current.
Similar to a deal that Shellpoint completed in October, the majority of loans were sourced through a bulk acquisition from Bank of America. The remaining loans were either originated by New Penn (0.1%) or acquired by New Penn from other originators (1.2%). The total number of originators is 15.
Kroll cited this as an important rating consideration. “While originator diversity is common and may help reduce geographic concentration, it also increases exposure to the underwriting standards and processes of originators with limited jumbo mortgage loan performance history,” the presale report states.
Kroll expects to assign AAA ratings to the senior tranches of notes to be issued by the deal, which benefit from 15% credit enhancement.
Merrill Lynch, Pierce, Fenner & Smith is the lead underwriter.
The deal comes to market as prime jumbo RMBS are trading at their tightest levels in a year, according to Wells Fargo Structured Products Research. In a report published Monday,the firm said spreads on current coupons of 3.5% were trading 100 basis points below comparable coupons in the to-be-announced market. By comparison, a year earlier, they were trading at the same level as comparable coupons in the TBA.
Redwood Trust is one of the few other sponsors to come to market with prime jumbo RMBS, in February and January. Otherwise issuance in the non-agency market has been dominated by reperforming and nonprime deals.