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DBRS Morningstar Rates Velocity Commercial Capital Loan Trust 2023-1

David Krechevsky
Jan 24, 2023
A notecard reading Mortgage Backed Securities

VCC 2023-1 is backed by 695 mortgage loans with a total principal balance of $240,308,194.

DBRS Inc. (DBRS Morningstar) said recently it has finalized provisional ratings on the mortgage-backed certificates, Series 2023-1 issued by Velocity Commercial Capital Loan Trust 2023-1 (VCC 2023-1).

It assigned the provisional ratings as follows:

  • $146.3 million Class A at AAA (sf)
  • $146.3 million Class A-S at AAA (sf)
  • $146.3 million Class A-IO at AAA (sf)
  • $5.9 million Class M-1 at AA (sf)
  • $5.9 million Class M1-A at AA (sf)
  • $5.9 million Class M1-IO at AA (sf)
  • $17.4 million Class M-2 at A (low) (sf)
  • $17.4 million Class M2-A at A (low) (sf)
  • $17.4 million Class M2-IO at A (low) (sf)
  • $14.1 million Class M-3 at BBB (sf)
  • $14.1 million Class M3-A at BBB (sf)
  • $14.1 million Class M3-IO at BBB (sf)
  • $30 million Class M-4 at BB (sf)
  • $30 million Class M4-A at BB (sf)
  • $30 million Class M4-IO at BB (sf)
  • $17.4 million Class M-5 at B (sf)
  • $17.4 million Class M5-A at B (sf)
  • $17.4 million Class M5-IO at B (sf)

Classes A-IO, M1-IO, M2-IO, M3-IO, M4-IO, and M5-IO are interest-only (IO) certificates. The class balances represent notional amounts, DBRS Morningstar said.

Classes A, M-1, M-2, M-3, M-4, and M-5 are exchangeable certificates. These classes can be exchanged for combinations of initial exchangeable certificates as specified in the offering documents, it said.

The AAA (sf) ratings on the Certificates reflect 39.1% of credit enhancement (CE) provided by subordinated certificates. The AA (sf), A (low) (sf), BBB (sf), BB (sf), and B (sf) ratings reflect 36.65%, 29.4%, 23.55%, 11.05%, and 3.8% of CE, respectively.

Other than the classes specified above, DBRS Morningstar does not rate any other classes in this transaction, it said.

VCC 2023-1 securitizes a portfolio of newly originated and seasoned fixed-rate, first-lien residential mortgages collateralized by investor properties with one to four units (residential investor loans) and small-balance commercial mortgages (SBC) collateralized by various types of commercial, multifamily rental, and mixed-use properties. 

The securitization is funded by the issuance of the certificates, which are backed by 695 mortgage loans with a total principal balance of $240,308,194 as of the cutoff date (Dec. 1, 2022).

Approximately 60.2% of the pool comprises residential investor loans, the remaining 39.8% are SBC loans. All loans in this securitization were originated by Velocity Commercial Capital LLC. They were underwritten to program guidelines for business-purpose loans where the lender generally expects the property (or its value) to be the primary source of repayment. 

Velocity Commercial Capital LLC, doing business as Velocity Mortgage Capital, operates as a real estate banking company. It provides mortgage solutions for residential, multi-family, mixed-use, and small commercial properties. It operates in 45 states and the District of Columbia, initiating loans through a network of independent mortgage brokers.

The collateral pool of residential investor loans consists of 472 mortgage loans with a total balance of approximately $144.6 million collateralized by one- to four-unit investment properties. Velocity underwrote the mortgage loans to No Ratio program guidelines for business-purpose loans.

The collateral for the SBC portion of the pool consists of 223 individual loans secured by commercial and multifamily properties with an average cutoff date loan balance of $429,364. None of the mortgage loans are cross-collateralized or cross-defaulted with each other.

You can read the full report here.

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