Fitch Expects To Rate BRAVO Non-QM Offering – NMP Skip to main content

Fitch Expects To Rate BRAVO Non-QM Offering

David Krechevsky
May 25, 2022
Fitch Ratings

Residential mortgage-backed notes supported by 573 loans with a total interest-bearing balance of $270 milllion.

Fitch Ratings said Tuesday it expects to rate the residential mortgage-backed notes to be issued by BRAVO Residential Funding Trust 2022-NQM2 (BRAVO 2022-NQM2).

The notes are supported by 573 loans with a total interest-bearing balance of approximately $270 million as of the cutoff date. There is also roughly $860,000 of non-interest-bearing deferred amounts whose payments or losses will be used solely to pay down or write off the class FB notes, Fitch said.

Loans in the pool were originated by multiple originators, and are serviced by Rushmore Loan Management Services LLC.

Fitch assigned the expected ratings as follows:

  • A-1: AAA
  • A-2: AA
  • A-3: A
  • M-1: BBB
  • B-1: BB
  • B-2: B
  • B-3, AIOS, XS, FB, SA, R: Not raterd.

Fitch noted that due its updated view on sustainable home prices, it views the home price values of this pool as 8.6% below a long-term sustainable level (versus 9.2% on a national level).

Fitch said the borrowers have a moderate credit profile — a 723 model FICO and a 38% debt to income ratio, which includes mapping for debt service coverage ratio (DSCR) loans — and low leverage, as evidenced by a 65% sustainable loan-to-value ratio (sLTV). The pool comprises 71% of loans treated as owner-occupied, while 29% were treated as an investor property or second home, which includes loans to foreign nationals or loans where the residency status was not provided.

Of the loans, 74.2% are designated as nonqualified mortgage (Non-QM) loans; for the remainder, the Ability to Repay Rule (ATR) does not apply. Lastly, 2.1% of the loans are 30 days' delinquent as of the cutoff date, while 29.9% are current but have experienced a delinquency within the past 24 months, Fitch said.

Approximately 88.8% of the pool were underwritten to less than full documentation, and 44.4% were underwritten to a 12-month or 24-month bank statement program for verifying income, which is not consistent with Appendix Q standards and Fitch's view of a full documentation program, Fitch said. A key distinction between this pool and legacy Alt-A loans, Fitch said, is that these loans adhere to underwriting and documentation standards required under the Consumer Financial Protections Bureau's ATR, which reduces the risk of borrower default arising from lack of affordability, misrepresentation or other operational quality risks due to rigors of the ATR mandates regarding the underwriting and documentation of the borrower's ability to repay.

The full report is available at www.fitchratings.com.

Published
May 25, 2022
More from
Non-QM
KBRA Assigns Preliminary Ratings To Non-QM Offering OBX 2022-NQM6

The $387.9 million non-prime RMBS transaction is characterized by a notable concentration of alternative income documentation (87.7%).

Non-QM
Jun 23, 2022
CFPB Director: Agency Reviewing QM Rules, Other Regulations

In a blog post, Rohit Chopra says the goal is to “more clearly communicate the agency’s expectations.”

Regulation and Compliance
Jun 21, 2022
Fitch Assigns Expected Ratings To Non-QM Offering STAR 2022-4

Of the loans in the pool of 673 loans with a balance of approximately $357.4 million, 54.5% are designated as Non-QM.

Non-QM
Jun 20, 2022
Angel Oak Mortgage Adds 7 New Employees

Focus for Non-QM lender is on account executives.

Non-QM
Jun 20, 2022
FGMC Launches Non-QM Loan Program To Tap Equity

Explorer Equity program offers flexible guidelines and expanded credit parameters for borrowers who may not otherwise qualify.

Non-QM
Jun 16, 2022
KBRA Assigns Preliminary Ratings To Non-QM Offering VERUS 2022-6

The $524.5 million non-prime RMBS  transaction consists of mortgages originated by various lenders, including Castle Mortgage.

Non-QM
Jun 16, 2022