KBRA Assigns Preliminary Ratings To AOMT 2022-1

Angel Oak Mortgage Trust 2022-1 is a residential mortgage-backed securities transaction sponsored by Angel Oak Mortgage Operating Partnership, LP consisting of collateral originated by Angel Oak Home Loans LLC (AOHL), Angel Oak Mortgage Solutions LLC (AOMS), together with AOHL, the “Angel Oak Originators”, Impac Mortgage, Homebridge Financial Services, Luxury Mortgage and other third-party originators (TPO) who each originated less than 10% of the pool by UPB, according to KBRA.

The transaction is valued at $537.6 million, collateralized by 1,138 mortgages, the majority of which are classified as non-prime. Angel Oak has been a recurring issuer of RMBS backed by non-QM loans, according to KBRA. Collateral originated by the Angel Oak Originators has been securitized by Angel Oak-related entities dating back to 2015, for a total of 29 RMBS transactions.

The majority of the loans in the AOMT 2022-1 pool were originated using alternative or non-traditional income verification documentation. The agency also revealed that approximately 64.3% of the loans were designated as non-QM, and do not benefit from the safe harbor legal protections and are potentially at heightened risk of litigation-related losses. The remainder of the collateral pool is exempt from the ATR Rules as the loans were originated for investment properties.

KBRA states that the transaction has minimal TRID risk with 64.3% meeting all of the requirements subject to the TRID rule. KBRA’s adjustment is based on numerous factors, including the number of TRIDEligible loans in the pool, the low cap on statutory damages ($4,000), and KBRA’s opinion of the low likelihood of successful affirmative claims, according to the agency.