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.

Subscribe Now

Access to a full range of industry content, analysis and expert commentary.

30-Day Free Trial

No credit card required. Access coverage of the securitization marketplace, including breaking news updated throughout the day.