Bayview, Wells add to surging RMBS pipeline

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A pair of new mortgage-backed securities offerings this week includes another first-time issuer, a trend indicating strong investor demand in private-label RMBS despite the economic headwinds of COVID-19.

According to ratings agency presale reports, a private mortgage aggregator affiliated with Bayview Asset Management is bundling a debut pool of mostly first-lien prime jumbo and GSE-eligible loans totaling $154.15 million.

The prime loans pooled into Oceanview Mortgage Loan Trust 2020-1, which is expected to close Thursday, were mostly originated by Bayview’s Lakeview Loan Servicing and via correspondent channels such as loanDepot, Cashcall Mortgage and Fairway Independent Mortgage Corp.

The Oceanview transaction includes eight classes of senior and subordinate notes, including two fixed-rate tranches with preliminary triple-A ratings from S&P Global Ratings and Moody’s Investors Service. The pool totals 803 loans, with an average balance of $191,973 across a mix of purchase and refinancing contracts. The loans are seasoned an average of 20.2 months, with a current combined loan-to-value ratio of 70.64%.

Over 89% are fixed-rate 30-year loans, and 67.5% are qualified mortgages under the Consumer Financial Protection Bureau’s ability-to-repay standards. Borrowers in the pool have a current average FICO of 745.

The ratings agencies report that 10.8% of the loans by balance are either in, or have completed, a requested forbearance program related to the coronavirus pandemic.

Although it is sponsoring the first RMBS under the Oceanview shelf, Bayview is experienced in marketing securities backed by re-performing loans (RPLs) through its Bayview Opportunity Master Fund MBS platform. Coral Gables, Fla.-based Bayview services approximately 151,000 residential mortgage loans totaling $19.5 billion, and is an approved seller/servicer for Fannie Mae and Freddie Mac.

Also being launched is Wells Fargo’s fourth prime jumbo offering of the year: a $335.33 million transaction of 427 loans to borrowers with significant equity and cash reserves. The issuance of Wells Fargo Mortgage Backed Securities 2020-4 Trust is also the ninth overall for the platform since 2018.

The transaction features 20 Class A series tranches carrying preliminary triple-A ratings from Moody’s. Fitch Ratings issued expected AAA ratings on five of the Class A note tranches.

The loans, all fixed-rate and originated by Wells under QM underwriting guidelines, carry an average balance of $785,310, with an average seasoning of 7.2 months. Nearly all of the loans (99.4%) have no history of late payments, while a small stable of formerly delinquent loans have had at least 24 months of consecutive payments (or “dirty current”).

As of the cutoff date, none of the loans were in a coronavirus forbearance plan.

Wells is also servicer of the loans.

The Oceanview and Wells deals add to over $1.7 billion in RMBS transactions priced in the past week and continues a wave of 19 deals (primarily non-agency) that came to market in the last month, according to Deutsche Bank research published Wednesday. The Oceanview deal also joins with two recent deals that were debut shelf MBS offerings: a “super” prime jumbo offering of mortgages to high-net worth clients of JPMorgan Wealth Management and a $734 million, single-borrower securitization of single-family rentals owned managed by FirstKey Homes, sponsored by Cerberus Capital Management.

“New issuers coming to market is a strong sign of healthy investor demand,” stated the Deutsche Bank report.

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RMBS prime jumbo RMBS Qualified Mortgages Bayview Asset Management Wells Fargo