CIM Trust 2021-J3 is preparing $320.2 million in residential mortgage-backed certificates secured by 340 fixed-rate mortgages.
The pool is a roundup of very high quality, virtually pristine mortgages with a weighted average original FICO score of 778, according to FitchRatings. The fixed-rate, fully amortizing safe harbor qualified mortgage loans were issued to borrowers with strong credit profiles, and as of May 1, 2021 none of the underlying mortgage borrowers were on an active coronavirus forbearance plan. The mortgage pool is considered relatively low leverage with large liquid reserves.
Bank of America Securities is the lead underwriter on the deal. Underlying loans were sourced from a host of originators, including Fairway Independent Mortgage Corporation, Guaranteed Rate, Inc., Guild Mortgage Company, LLC and PrimeLending, according to Fitch.
Some borrowers in the pool had been on a coronavirus forbearance plan, but had since been reinstated. Fitch did not penalize those associated loans for their previous status.
If, after the deal closes, a borrower enters into an active forbearance plan due to the coronavirus, the loan will remain in the pool. The servicer, Shellpoint Mortgage Servicing, will be required to make the principal and interest payments. Such loans will be considered delinquent.
Should the borrower fail to resume payments, the loan will be considered modified. The advancing party will be reimbursed from principal collections on the overall pool, Fitch said.
That reimbursement from the pool will result in writedowns to the most subordinate class, which will be written up again as subsequent recoveries are realized.
One positive credit attribute of the deal is an enhancement of a senior subordination floor of 1.40 percent, which in Fitch’s opinion will mitigate potential tail-end risk and loss exposure to senior tranches as the loans pays down and the pool size contracts.
Also, thanks to the development and deployment of COVID-19 vaccinations, Fitch revised its economic risk factor (ERF) to 1.5 and 1.0, down from 2.0 with respect to the ‘BBsf’ and ‘Bsf’ rating classes. This falls in line with Fitch’s revised U.S. GDP to 6.2 percent for 2021, from 3.3 percent.
