In a year where private label securitization issuances are expected to increase by nearly 85%, three companies announced deal closings on Monday.
The November estimates from Bank of America Securities calls for gross PLS issuance of $129 billion by year-end, up from $70 billion for 2023. Next year it predicts $176 billion, which would be the second best year post-financial crisis, trailing the $214 billion of issuances in 2021.
A similar report from
A trio of factors are driving that forecast for next year, the B of A analysts said.
"Increased de-regulation and potential reduction of the GSE footprint should drive more agency investor PLS issuance," the report said. "At current pricing levels, execution in PLS is already favorable vs agency."
If mortgage rates remain elevated, that should drive consumers towards home equity products. One of those three deals just announced consists of closed-end home equity loans.
Finally, B of A expects an increase in deal calls for already securitized non-qualified mortgage and single family rental transactions. "We think most of them get resecuritized and thus gross issuance will increase," it continued.
The Ellington Financial securitization consists of $199 million of
Further details about the transaction were not included in the press release other than it has been rated by both Fitch and KBRA and the senior tranche having a AAAsf and AAA (sf) rating respectively.
The other two transactions were primarily non-QM.
Angel Oak Mortgage Trust said it plans to deploy the capital released as a result of this deal to continue its accretive purchases of high-quality non-QM loans to drive incremental net interest income.
Just under 56% of the mortgages are non-QM, with the rest being investor loans and thus exempt from ability-to-repay requirements, a Fitch report on the deal noted.
The senior tranches got a AAA rating from Fitch. Select Portfolio Servicing is the servicer and Newrez is the master servicer, the report said.
Finally, A&D Mortgage, working with Atlas Merchant Capital and Imperial Fund Asset Management, have priced a $303.9 million non-QM securitization, A&D Mortgage Trust 2024-NQM6. This
"Securitization remains a cornerstone for expanding access to capital, especially within the Non-QM mortgage sector," said Bob Diamond, founding partner and CEO of Atlas Mortgage Capital in the A&D press release. "This deal represents a sound investment, fortified by strong credit enhancements and dynamic collateral, making it resilient against market fluctuations."
Almost 90% of the mortgages originated used alternative documentation, an A&D press release said. It is the primary servicer, with a Mr. Cooper subsidiary serving as the master servicer.
The properties underlying the loans is a mixed bag: single-family residential, planned unit developments, condominiums, two-to-four family, mixed-use properties, manufactured housing, five-to-10 unit multifamily residences, and condotels, a Standard & Poor's report said.
It gave preliminary ratings to the A-1 tranches of AAA (sf), which "reflect(s) our view of the transaction's collateral composition, credit enhancement, and representation and warranty framework, among other factors."
