Fitch Ratings said Tuesday it expects to rate residential mortgage-backed certificates to be issued by EFMT 2023-1, Mortgage Pass-Through Certificates, Series 2023-1 (EFMT 2023-1). The certificates are secured by non-qualified mortgages (Non-QM) originated primarily by LendSure Mortgage Corp. and American Heritage Lending.
The certificates are supported by 796 loans with a balance of $330.37 million as of the cutoff date. This will be the eighth EFMT rated by Fitch and the first EFMT transaction in 2023.
The certificates are secured mainly by Non-QM loans as defined by the Ability to Repay (ATR) rule. Approximately 48.8% of the loans were originated by LendSure, a joint venture between LendSure Financial Services Inc. and Ellington Financial Inc. Approximately 23.8% of the loans were originated by American Heritage Lending. The remaining 27.4% were originated by other third-party originators that contributed no more than 10% each to the pool.
Fitch said it expects to assign the 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, X, R: Not rated.
Of the pool, 57.75% of the loans are designated as Non-QM; the remaining 42.25% are investment properties not subject to the ATR rule. Rushmore Loan Management Services LLC will be the servicer and Nationstar Mortgage LLC will be the master servicer for the transaction.
Collateral consists of 30-year fully amortizing loans (71.34%); 40-year fully amortizing loans with a 10-year IO period (25.91%); 30-year fully amortizing loans with a 10-year IO period (2.46%); 30-year fully amortizing ARM loans (0.16%); and 25-year fully amortizing loans (0.12%).
The vast majority of the pool is composed of fixed-rate loans at 99.84%; the remaining 0.16% are adjustable-rate mortgage loans based off of one-year LIBOR. The pool is seasoned at about seven months in aggregate, as determined by Fitch (five months per the transaction documents).
To read the full report, visit www.fitchratings.com.
