Fixed and adjustable-rate, first-lien residential mortgages that satisfy the Consumer Financial Protection Board (CFPB)’s Ability-to-Repay (ATR) rules are securing the Verus Securitization Trust 2021-4, which will issue $459.8 million in notes.
A number of mortgage originators contributed the 751 mortgage loans to the pool, including Excelerate Capital, which was the top originator in the pool, accounting for 21% of loans. Other loan contributors each accounted for less than 15% of the mortgage loan pool, according to DBRS Morningstar.
Expanded prime and non-prime mortgages are in the securitized pool, which have a total principal balance of $466 million.
About 33.2% of the loans underpinning the deal were made to investors for business purposes, and do not have to adhere to ATR or Qualified Mortgage rules. Under rules set by the CFPB, a mortgage broker must make a reasonable, good faith determination before or when consummating a covered mortgage loan that the consumer has a reasonable ability to repay the loan.
Conforming mortgage loans are eligible to be purchased by Fannie Mae or Freddie Mac, because they meet Fannie and Freddie standards, or limits, on the amount that can be borrowed. They also have to meet certain criteria for credit, down payment and LTV.
In terms of rating expectations, the $334 million class A-1 notes are expected to garner ‘AAA’; the $30.1 million class A-2 notes are expected to receive ‘AA’; and the $47.4 million Class A-3 notes a ‘A’.
