Verus Securitization Trust is preparing to sell $338.2 million in mortgage-backed securities, backed by a range of first-lien, fixed- and adjustable-rate mortgages.
The Verus Securitization Trust 2024-R1 comes to market soon after the 2024-8 series of notes, but the latest deal is composed mainly of mortgage assets that have been seasoned for more than 24 months, according to ratings analysts at S&P Global Ratings. Almost all the loans were previously securitized in three Verus transactions, the series 2019-4, 2020-2 and 2020-INV1.
Also, only Shellpoint Mortgage Servicing will service the assets on the current deal, while Lima One Capital and Shellpoint are servicing the assets in the 2024-8 series.
The current deal will issue about 11 tranches of notes, mainly class A, M and B notes, the rating agency said. While the collateral pool is composed of a mix of fixed- and adjustable-rate assets, the notes are pricing on a fixed initial rate, S&P said.
Yields on the notes, priced against the three-month I-curve, are expected to range from 5.1% in the AAA, class A1 notes to 6.0% on the M1 notes, according to Asset Securitization Report's deal database.
Barclays Capital is lead underwriter, S&P said, while ASR's database notes that J.P.Morgan Securities, Morgan Stanley and Wells Fargo are managers.
Interest on the class B3 notes will be used to cover any potential cap carryover amounts from the class A notes, the rating agency said.
S&P says that while the pool is generally in line with its expectations of a non-prime residential mortgage pool, the pool is weaker than a typical prime pool of loans. There is a significant number of non-QM, business-purpose investor loans (45.3%), and loans with alternative income documentation (49.5%), the rating agency said.
The A1, A2 and A3 will repay investors on a pro-rata basis, while the mezzanine and subordinate levels will repay investors sequentially.
S&P assigns AAA, AA and A to classes A1, A2 and A3, respectively. The M1, B1 and B2 notes receive BBB-, BB- and B ratings, respectively.
