Sponsors of PMT Loan Trust 2021-INV1 plan to issue residential mortgage-backed securities (MBS) worth $ 414 million. good ratings throughout most of the deal, according to the Kroll Bond rating agency.
The inclusion of investment real estate loans in Residential Mortgage Backed Securities (MBS) transactions generally raises rating alerts, possibly because these properties are more susceptible to speculation, more likely to have homeowners with less stable incomes and less likely to receive adequate maintenance.
PMT Loan Trust home loans, which represent the entire collateral pool, are eligible for agencies. The borrowers of the underlying loans of the PMT Loan Trust 2021-INV1 have an original weighted average (WA) credit score of 778, plus a WA debt-to-income ratio of 34.6%.
In addition, borrowers have significant equity in properties securing mortgages, as evidenced by WA’s original loan-to-value ratio of 59.2%, KBRA said.
The KBRA said it assigns higher probabilities of default to unoccupied properties compared to primary residences. In addition, the rating agency said, it applied an additional penalty to the pool’s projected default, compared to typical RMBS prime pools.
Approximately 1,416 loans are in PMT Loan Trust’s collateral pool as of the October 1 agreement deadline. The loans have an average balance of $ 292,855.
The business is geographically diverse along two lines, the state and metropolitan areas.
Mortgages in California represent 38.1% of the pool’s loan balance, followed by Washington, with 7.4% and Texas, with 5.4%. The collateral pool exhibits an even higher level of diversification by Basic Statistical Area (CBSA) – even though most of the major CBSAs are located on the West Coast. Los Angeles accounts for about 13.2% of the pool’s balance, followed by Washington, DC at 7.0% and San Francisco at 6.7%.
The six super senior tranches, rated AAA, benefited from a 15% credit enhancement. The senior support tranche has an enhancement level of 5.5%, and the subordinated sequential tranches have an enhancement ranging from 0.85% to 5.15%.
Bank of America and Morgan Stanley & Co. are the main buyers of the notes.