The transaction HOMES 2026-NQM2 Trust is about to issue $386.8 million in residential mortgage-backed certificates, sponsored by APCA Resi 04B and secured by a mixed pool of loans on primary residences and secondary, investor properties.
All notes issued from the deal have a legal final maturity of January 2071, according to ratings analysts at Fitch Ratings. The transaction will issue notes through about 10 tranches of classes A, M and B.
Structurally, the deal will repay noteholders through a modified sequential-payment order. Principal will be repaid pro rata to the senior certificates—including A-1FCF and A-1LCF sequentially, and A-!A, A-1B, A2 and A3—. The subordinate bonds will not receive any principal until the senior classes are reduced to zero, Fitch said.
Full documentation was completed on just 17.9% of the pool, Fitch said, while bank statements and debt service coverage ratio (DSCR) account for 17.6% and 28.0%, respectively.
Bridgeway Lending Partners, or LenderMac, and loanDepot primarily originated the 766 underlying collateral mortgages, Fitch said. While other originators, including subsidiaries of funds managed by Ares Alternative Credit Management, contributed loans to the pool. No other originator contributed more than 10% of loans to the current pool balance, Fitch said.
Meanwhile, Select Portfolio Servicing, NewRez and PennyMac will service the underlying loans. Fay Servicing is also on the deal as a special servicer.
S&P Global Ratings notes that Canopy Financial Technology Partners, Consolidated Analytics, SitusAMC and Opus Capital Markets Consultants performed due diligence on all the underlying mortgages.
The pool of first-lien loans has an average current balance of $505,083, with a cumulative loan-to-value (LTV) ratio of 69.5%.
Almost the entire pool is current, 97.6%, while the 30-day-plus delinquency rate was just 2.3%, the rating agency said. Half of the underlying borrowers are self-employed, and they have a weighted average (WA) FICO score of 755, with liquid reserves of $276,203, the rating agency said.
S&P assigns ratings ranging from AAA on all the A1 notes; AA on the A2 notes; A on the A3 notes; BBB on the M1 tranche; and BB on classes B1 and B2.
Fitch assigns AAA to the A1 notes.
