Fitch Issues Final Ratings On Non-QM Offering NRMLT 2022-NQM4 – NMP Skip to main content

Fitch Issues Final Ratings On Non-QM Offering NRMLT 2022-NQM4

David Krechevsky
Jul 12, 2022
Fitch Ratings New logo.

The notes are supported by 527 newly originated loans that have a balance of $272.4 million; 69.4% of the loans in the pool are designated as Non-QM,

Fitch Ratings said Tuesday it has assigned final ratings to the residential mortgage-backed notes to be issued by New Residential Mortgage Loan Trust 2022-NQM4 (NRMLT 2022-NQM4).

It assigned the final ratings as follows:

  • A-1: AAAsf
  • A-2: AA+sf
  • A-3: Asf
  • M-1: BBBsf
  • B-1: BB+sf
  • B-2: B+sf
  • B-3, A-IO-S, R: Not rated.

The notes are supported by 527 newly originated loans that have a balance of $272.4 million as of the June 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 NewRez subsidiary. The loans have been serviced since origination by Shellpoint Mortgage Servicing (SMS).

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, 69.4% are designated as Non-QM, while the rest are not subject to the ATR Rule.

Fitch said the borrowers have a stronger credit profile when compared with other non-QM transactions, with a 750 Fitch model FICO score and 38% debt/income (DTI) ratios, as determined by Fitch.

The pool consists of 63.1% of loans in which the borrower maintains a primary residence, while 36.9% are considered investor properties or second homes.

According to Fitch, 84% of the pool was underwritten to less than full documentation. Approximately 62% was underwritten to a 12-month or 24-month bank statement program for verifying income, which is not consistent with Fitch's view of a full documentation program.

These loans adhere to underwriting and documentation standards required under the Consumer Financial Protection Bureau's (CFPB) ATR Rule. The standards are meant to reduce the risk of borrower default arising from lack of affordability, misrepresentation, or other operational quality risks due to rigor of the ATR Rule's mandates with respect to the underwriting and documentation of the borrower's ATR. Additionally, 22% are debt service coverage ratio (DSCR) product.

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

Published
Jul 12, 2022
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