Angel Oak, a regular issuer of nonprime residential mortgage bonds, is marketing its first transaction with a credit rating.
Angel Oak Mortgage Trust I, LLC 2017-1 is supported by 529 loans with a balance of $146.47 million, all of them originated by affiliates of Angel Oak, an Atlanta-based capital markets company, according to Fitch Ratings.
Similar to unrated transactions that Angel Oak completed last year, the collateral is a mix of loans to borrowers who are reestablishing their credit and borrowers who cannot quality for a loan guaranteed by Fannie Mae or Freddie Mac because do not use standard documentation to verify their income.
The pool has a weighted average credit score of 698 and weighted average original combined loan-to-value ratio of 76.9%. Roughly 29% consists of borrowers with prior credit events, 6% are foreign nationals and 4% are second lien loans.
Twenty two loans experienced a delinquency since origination, 17 of which were due to servicer transfer issues. Approximately 22% were made to self-employed borrowers underwritten to a 24-month bank statement program.
Among other major ratings considerations, Fitch cited the high concentration of investment properties, which are generally considered to be at higher risk of default than owner-occupied properties .
“Approximately 16% of the pool comprises investment properties, 6% of which were originated through the originators’ investor cash flow program that targets real estate investors qualified on a cash flow ratio basis,” the presale report states.
The collateral is also highly concentrated in the southeastern United States in areas prone to hurricane risk. Approximately 18% is located in the Miami metropolitan statistical area, and there are also concentrations on the Georgia and North Carolina coasts.
Fitch expects to assign an AAA rating to the senior notes, which benefit from 46.65% credit enhancement. DBRS gave a provisional rating of AAA to the senior notes as well.