FirstKey Mortgage is marketing its fifth portfolio consisting primarily of formerly troubled first-lien residential mortgages that have rebounded to re-performing status.
The 2,517 loans in the Towd Point Mortgage Trust 2016-5 pool include a 77.8% share of well-seasoned, modified loans. The loans in the pool have a principal balance of $550.7 million, and will secure nine classes of A and B notes totaling $550.2 million.
Bond rating agency DBRS, Morninstar Credit Ratings and Fitch Ratings have each assigned provisional ‘AAA’ structured finance ratings to the $354.4 million Class A-1 notes atop the capital stack. Those bonds carry a 35.6% credit enhancement.
DBRS and Fitch also rate the class A-2 senior 30-year notes totaling $35.8 million, with an ‘AA’ rating and a 29.1% CE level. Morningstar assigned an 'AA+' to the ratings.
Only Morningstar rated the subordinate notes in the issue, ranting from an 'AA-' for the Class M1 notes to a 'B' for the Class B3 notes.
The modifications for 93.5% of the loans in the modified loan pool took place more than two years ago, amid a pool of loans (with an average balance of $218,624) that have a weighted average seasoning of 115 months. About 69% of the loans have had no delinquency for the past 24 months, providing the pool a higher credit quality compared to other re-performing loan securitizations.
The $550.3 million outstanding pool balance is the smallest of any Towd Point securitization in 2016.
DBRS states 87% of the loans, carrying a weighted average coupon of 4.14% and a borrower FICO average score of 676, have been current for the past year, and over 33% have been current for three years.
Only 7.6% of the loans are interest only, and only 0.8% of the pool (involving 18 loans) involved prior bankruptcies.
The loans are serviced by Credit Suisse affiliate Select Portfolio Servicing.
The deal is expected to close Dec. 9.
