Barclays

A range of investment residential properties, including single-family homes, condominiums and multi-unit properties, will secure the debt.

The transaction's senior, interest-only tranches, which are also initially exchangeable, pay a coupon of 0.50%.

Yields, are expected to come in ranging from 4.4% on the class A notes, to 4.5% on the class A4 notes.

ACHM 2025-HE1 will repay notes using a pro-rata, sequential pay structure that must satisfy an overcollateralization test, and cumulative loss and delinquency triggers.

Borrowers' high incomes and the abundance of monthly free cash flow speed up repayments and mitigate the transaction's exposure to economic downturns.

Second-lien loans make up virtually the entire pool, which carries some risk of poor recovery rates. Yet 78% of the pool is also considered safe-harbor mortgages.

Excess cash flow will pay timely interest and protect against realized losses in the rated certificates before being paid out to the class X notes.

Servicers—Citadel, NewRez and Selene Finance—will not advance any delinquent principal and interest. Eventually, that should reduce loss severities to the deal.

Amortization will start after the deal's two-year revolving period, when the trust will deposit revenue including collections and upgrades into the acquisition account.

Affirm grade A loans account for 34.8% of the pool and have historically produced the lowest defaults in the sponsor's managed portfolios.