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Fitch reported that 61.7% of the COLT 2021-5 residential mortgage-backed pool is made up of non-QM loans, 13.4% were originated through a retail channel, and for the remainder, the Ability to Repay Rule does not apply.
“The collateral consists of 568 loans totaling $337 million and seasoned at approximately two months in aggregate,” according to Fitch. “The borrowers have a strong credit profile — a 739 model FICO, a 43.3% debt-to-income ratio (DTI), which includes mapping for debt service coverage ratio (DSCR) loans, and moderate leverage — and an 80.0% sustainable loan-to-value ratio (sLTV). The pool consists of 59% of loans treated as owner-occupied, while 41% were treated as an investor property (38%) or second home (2%).”
An estimated 85.7% of the pool was underwritten to less than full documentation and 45.4% was underwritten to a 12-month bank statement program for verifying income, according to the ratings. The company says that the 12-month or 24-month bank statement is not consistent with Appendix Q standards as well as Fitch's view of a full documentation program.
“Additionally, 34.8% comprises a DSCR or no ratio product, 3.3% is an asset depletion product and the remaining is a mixture of other alternative documentation products. Separately, close to 2.8% of the loans were originated from foreign nationals, nonpermanent resident aliens, or are unknown,” according to Fitch.