RMBS

Fitch expects to assign AAA to the class A notes.

The A1 tranche of $172 million (66.8%) is rated as AAA by Fitch and KBRA.

The deal is Angel Oak Mortgage Trust's seventh RMBS transaction in 2023.

Major U.S. institutions and foreign buyers in runoff mode have swollen supply and created value for RMBS buyers. But rate cuts in 2024 could sap the strength of that tide.

Some 73.1% of the loans had disqualifying deficiencies related to origination or documentation guidelines, which prevented Fannie Mae or Freddie Mac from purchasing them.

The class A1A notes have credit enhancement levels of 30.00% on the A1A notes; 26.40% on the A1B and A1 notes; 18.65% and 12.75% on the A2 and A3 notes, which accounts for the credit enhancements on the senior notes.

Rocket Mortgage accounts for the single largest percentage of originators in the pool, while Select Portfolio Servicing will service all of the loans in the pool.

High interest rates and constrained inventory will take its toll on originations and securitization activity in 2024, the rating agency commented.

The market appears strongly divided, as commercial real estate presents investors with stark choices and big risk-management decisions, often differing by region and by sub-sector.

Home equity investment (HEI) agreements homeowners receive upfront cash payments in exchange for giving an investor a stake in the property and the right to collect returns.