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Fitch To Rate BRAVO Residential Funding Trust Non-QM Offering

David Krechevsky
Aug 30, 2022
Fitch Ratings New logo.

BRAVO 2022-NQM3 notes are supported by 920 loans with a total interest-bearing balance of approximately $387 million. 

Fitch Ratings said this week it expects to rate the residential mortgage-backed notes to be issued by BRAVO Residential Funding Trust 2022-NQM3 (BRAVO 2022-NQM3).

The notes are supported by 920 loans with a total interest-bearing balance of approximately $387 million as of the cutoff date. There is also roughly $879,000 of non-interest-bearing deferred amounts whose payments or losses will be used solely to pay down or write off the class FB notes.

Loans in the pool were originated by multiple originators, and are serviced by Acra Lending, Rushmore Loan Management Services LLC, and AmWest Funding Corp.

Fitch said it expects to rate the notes as follows:

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

The pool comprises 58% of loans treated as owner-occupied, while 42% were treated as an investor property or second home (includes loans to foreign nationals or loans where the residency status was not provided). Of the loans, 55.1% are designated as a nonqualified mortgage (Non-QM) loan, while the Ability to Repay Rule (ATR) does not apply to 42%. Lastly, 2.3% of the loans are 30 days' delinquent as of the cutoff date, while 10.1% are current but have experienced a delinquency within the past 24 months.

Approximately 87% of the pool were underwritten to less than full documentation, and 39.3% 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..

Additionally, 35% comprise a DSCR or property cash flow-focused product, 2.2% are a Written Verification of Employment (WVOE) product, and the remaining are a mix of other alternative documentation products. Separately, 35 loans were originated to foreign nationals.

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

Published
Aug 30, 2022
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