Verus Securitization Trust is returning to market to float $669.9 million in mortgage-backed securities, secured by non-prime assets.
VMC Asset Pooler is sponsoring the transaction, which offers investors about 11 tranches of notes. All of the class A notes, which are senior in the capital structure, will repay on a pro rata basis, according to Kroll Bond Rating Agency. The class A, M and B1 notes are fixed rate, according to analysts at S&P Global Ratings, while the B2 and B3 notes appear to be on a floating rate benchmark. All of the notes have a final maturity of Sept. 25, 2069.
Morgan Stanley is lead underwriter on Verus Securitization Trust 2024-7, say the rating agencies. The Asset Securitization Report's deal database, meanwhile, lists a number of managers, including Atlas SP Partners, Bank of America Merrill Lynch, Barclays, Citigroup Global Markets and Deutsche Bank Securities.
In the collateral pool breakdown, KBRA notes that owner-occupied properties account for a majority of the assets, at 55.1%; the amount of investor properties represents 41.6% of the deal—which counts as a potential rating negative—and second homes are just 3.3% of the asset pool. Most of the loans, 65.0%, will be used for purchases, while cash-outs account for 30.3% of the intended purpose and only 4.7% are for refinancings, KBRA said.
S&P notes that the pool, which contains 1,280 loans, were sourced from a range of originators, and each of them accounting for less than 10.0% of the collateral, except Hometown Equity Mortgage, which originated 12.08% of the pool. NewRez is the primary servicer, while Nationstar Mortgage is the master servicer on the transaction, S&P said.
Slightly more than ninety percent of the mortgages in the pool were underwritten through alternative or non-traditional means, including bank statements ranging between 12-24 months and debt service coverage ratios, according to KBRA.
On a weighted average (WA) basis, the pool has a cumulative loan-to-value (LTV) ration of 70.6%, an updated FICO score of 743, and a current rate of 8.25%, according to S&P.
As for credit enhancement, the notes benefit from subordination and excess spread.
S&P assigns AAA, AA and A to the A1, A2 and A3 notes; BBB-, BB and B to the notes. KBRA will put AAA on the A1A, B and A1 notes; BBB+, BBB- and BB- to the M1, B1 and B2 notes.
