Fitch Expects To Rate Non-QM RMBS Offering

Fitch Ratings says it has assigned expected ratings to residential mortgage-backed notes to be issued by New Residential Mortgage Loan Trust 2022-NQM3 (NRMLT 2022-NQM3).

The notes are supported by 595 newly originated loans that have a balance of $346.1 million as of the April 1, 2022, cutoff date. The pool consists of loans originated by NewRez LLC, formerly known as New Penn Financial LLC, and Caliber Home Loans, a subsidiary of NewRez.

The notes are secured mainly by non-qualified mortgage (Non-QM) loans as defined by the Ability-to-Repay (ATR) Rule. Of the loans in the pool, 71.8% are designated as Non-QM, while the remainder are not subject to the ATR Rule.

Fitch set 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, A-IO-S, R, XS-1, XS-2: Not rated.

Based on its updated view on sustainable home prices, Fitch said, it views the home price values of this pool as 9.7% above a long-term sustainable level (vs. 9.2% on a national level as of April 2022). Underlying fundamentals are not keeping pace with the growth in prices, which is a result of a supply/demand imbalance driven by low inventory, low mortgage rates, and new buyers entering the market. These trends have led to significant home price increases over the past year, with home prices rising 18.2% year over year nationally as of December 2021.

According to Fitch, the borrowers have a stronger credit profile when compared to other Non-QM transactions. The pool consists of 66.7% of loans where the borrower maintains a primary residence, while 33.3% are considered an investor property or second home. Only 32% of the loans were originated through a retail channel. 

NewRez and Caliber originated 100% of the loans, which have been serviced since origination by Shellpoint Mortgage Servicing (SMS).

You can view the full report at www.fitchratings.com.