Fitch, KBRA Rate Non-QM RMBS Offering – NMP Skip to main content

Fitch, KBRA Rate Non-QM RMBS Offering

Apr 19, 2023
Mortgage-Backed Securities (MBS)

OBX 2023-NQM3 Trust is a $407.5M securitization backed by 807 mostly Non-QM loans, 22% from SG Capital.

After getting pummeled last year in the secondary market, non-qualified mortgage (Non-QM) securitizations appear to be on the rebound.

Both Fitch Ratings and KBRA recently rated six classes of mortgage pass-through notes from OBX 2023-NQM3 Trust  (OBX 2023-NQM3), a $407.5 million non-prime residential mortgage-backed securities (RMBS) transaction.

The underlying collateral, comprising 807 residential mortgages, is characterized by a notable concentration of alternative income documentation (89.1%). The loans in the collateral pool were originated by 69 institutions, many of them relatively small, unrated entities that contributed less than 10% of the loans. The largest originator was SG Capital Partners, LLC, which originated loans comprising 21.9% of the pool. 

Most of the loans (68.5%) are either classified as Non-QM or as exempt from the Ability-to-Repay/Qualified Mortgage (ATR/QM) rule due to being originated for non-consumer loan purposes (27.4%) or by a CDFI (3.6%).

KBRA assigned its ratings as follows:

  • A-1: AAA (sf)
  • A-2: AA (sf)
  • A-3: A (sf)
  • M-1: BBB (sf)
  • B-1: BB+ (sf)
  • B-2: B+ (sf)
  • B-3, A-IO-S, XS, R: Not rated

Fitch said it expects to assign ratings as follows:

  • A-1: AAA (sf)
  • A-2: AA (sf)
  • A-3: A (sf)
  • M-1: BBB (sf)
  • B-1: BB (sf)
  • B-2: B (sf)
  • B-3, A-IO-S, XS, R

The collateral consists of 15-year, 30-year, and 40-year fixed-rate and adjustable-rate mortgage (ARM) loans. ARMs constitute 14.06% of the pool as calculated by Fitch, which includes 3.7% debt service coverage ratio (DSCR) loans with a default interest rate feature; 12.4% are interest-only (IO) loans; the remaining 85.94% are fully amortizing loans.

The pool is seasoned approximately 10 months in aggregate, as calculated by Fitch (eight months per the transaction documents). Borrowers in this pool have a moderate credit profile with a Fitch-calculated weighted average (WA) FICO score of 742, debt-to-income ratio of 40%, and moderate leverage of 74% sustainable loan-to-value ratio. Pool characteristics resemble recent nonprime collateral, Fitch said,

You can read the Fitch Ratings report here, and the KBRA report here (registration required).

About the author
David Krechevsky was an editor at NMP.
Published
Apr 19, 2023
More from
Non-QM
Investor Homebuying Slows, Small Buyers Claim Biggest Share In 15 Years

Smaller investors accounted for 66.2% of investor purchases in the first half of 2026 and relied on cash much less often than mega-investors

Oct 22, 2026
For The Love Of Mortgage

Nearly four decades in lending have reinforced a veteran’s conviction: lasting success comes from solving borrower problems, adapting, and earning trust

Oct 21, 2026
The Non-QM Opportunity Beyond The Rate Conversation

For business owners and investors, purchase price, negotiating power, and cash flow can create reasons to buy before rates fall

Oct 21, 2026
Carrington, Newfi Stress Non-QM Staying Power

Both lenders point to financial strength and continued investment in broker partnerships amid rising rates, even while Non-QM production grows

Oct 14, 2026
Non-QM Locks Defy September Slowdown, ARM Share Hits Seven-Year High

Non-QM lock volume rose 8% from August while overall activity declined, and adjustable-rate loans captured their largest share since Optimal Blue’s tracking began in 2019

Oct 13, 2026
Conventional Credit Tightens While Non-QM Gains Ground

Lenders pulled back on cash-out refinance and investor loan offerings in September, even as non-agency programs continued to support the jumbo market, and Non-QM lending gained market share

Oct 09, 2026