Fitch Rates Non-QM RMBS Offering With Loans By Acra Lending, LoanStream

Fitch Ratings said this week it has assigned ratings to the residential mortgage-backed notes issued by BRAVO Residential Funding Trust 2023-NQM3 (BRAVO 2023-NQM3).

Loans in the pool were originated primarily by Acra Lending and LoanStream Mortgage, with the remainder coming from multiple originators. The loans are serviced by Citadel and Rushmore Loan Management Services LLC.

The notes are supported by 674 loans with a total interest-bearing balance of approximately $302 million as of the cut-off date. 

Fitch 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, FB, R, SA, AIOS, XS: Not rated.

Approximately 96.6% of the pool loans were underwritten to less-than-full documentation; 36.2% 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, the company said.

A key distinction between this pool and legacy Alt-A loans, Fitch said, is that these loans adhere to underwriting and documentation standards required under the Consumer Financial Protections Bureau's Ability-to-Repay (ATR)/QM Rule, which reduces the risk of borrower default arising from lack of affordability, misrepresentation, or other operational quality risks due to the ATR mandates regarding underwriting and documentation of the borrower's ability to repay.

The borrowers have a moderate credit profile — a 727 model FICO and a 51% debt-to-income ratio (DTI), which includes mapping for debt service coverage ratio (DSCR) loans — and leverage, as evidenced by a 67% sustainable loan-to-value ratio (sLTV).

You can read the full report here.