The Towd Point Mortgage Trust, 2022-EB01 transaction is preparing to issue $247.7 million in mortgage-backed notes, secured by both beneficial interests in mortgage loans that the trust holds and real-estate owned properties.
This is the third publicly rated, non-agency securitization of its kind to come to market in more than a decade.
Loans in the underlying collateral pool are seasoned, non-performing and re-performing loans insured by the Federal Housing Administration, according to a pre-sale report from Kroll Bond Rating Agency.
Initial note purchasers include BofA Securities, J.P. Morgan Securities and Wells Fargo Securities, KBRA said. FirstKey Mortgage acts as the sponsor, seller and asset manager of the deal, for which it is also serving as a representation and warranties provider.
Expected to close on March 1, the deal is positioned as a Ginnie Mae Federal Housing Administration (FHA) early buyout, in which FHA loans could be bought out of Ginnie Mae MBS. Once bought out of the GNMA pools, the servicer is relieved of the burden of making GNMA MBS advances on the delinquent collateral. The servicer can also earn premiums for redelivering re-performing loans into GNMA eligible pools.
KBRA expects to assign ratings ranging from ‘AAA’ on the $197b million, class A notes to a ‘BB’ rating on the $6.1 million M4 class.
The rating agency makes estimates about the default date of each mortgage loan in order to determine how long, in terms of months, the loans has had an outstanding balance while in default, called default seasoning. By that measure the weighted average (WA) default seasoning for the mortgage pool is about 11 months.
The mortgage loans have also had about $11.1 million in pre-existing servicing advances as of the cut-off date of December 31, 2021.
Towd Point, 2022-EB01 has 2,177 loans in the pool, all of which are first-lien and which have an average balance of $113,795. Almost all of the loans are fixed-rate, 97.9%. On a WA basis, the mortgages have an original term of 400 months, a remaining term of 266 and a current rate of 4.29%.
Also, the large majority of the pool, 82.0%, is comprised of single-family homes. The rest of the pool is fragmented into much smaller representations of townhouses, 7.6%; condominiums, 3.3%; manufactured housing, 3.3%; two- to four-family homes, 2.6%; and planned unit development.
In terms of borrower characteristics, the pool has a non-zero, WA updated FICO score of 589; a WA original loan-to-value (LTV) ratio of 93.3%; and a WA current LTV 57.7%.
