EverBank Puts Second Jumbo Deal in the Pipeline

EverBank has a second jumbo securitization in the works backed by $303 million in 15- and 30-year loans, according to a Fitch Ratings presale report.

The presale report finds the deal, EverBank Mortgage Loan Trust 2013-2, “closely resembles” the previous EverBank transaction “in materially all respects," but there are some nuances that differentiate the two.

“Collateral  for EverBank's first two deals is very strong, albeit slightly better on this transaction," Rachel Brach, a director in Fitch's U.S. RMBS group, told this publication. “For  one,  there’s  better  FICO  score distribution and improved regional geographic concentration in this latest EverBank deal.”

Fitch finds eight “positive” characteristics in the deal and an equal number of “concerns” or “net negative” characteristics from a credit quality perspective.

Positives are the deal’s low LTVs, high credit scores, fixed-rate collateral, full documentation, high primary homes percentage, low-weighted average mortgage interest rate, traditional “straightforward” senior-subordinate shifting-interest structure, and third-party due diligence done on 100% of the pool.

Fitch calls most aspects of the loan rep and warrant framework in line with its standards but calls its R&W counterparty risk a “net negative” in that it “does not meet the criteria financial conditions threshold.

“As a result, Fitch made an adjustment to its loss expectations to account for the possibility of slightly higher defaults and losses arising from EverBank’s inability to repurchase loans due to breaches.”

Also, Fitch notes a limited alignment of interests as neither EverBank nor any of its affiliates intends to retain any credit risk in the deal “other than that associated with the R&Ws.” In addition, two of the pool’s 367 loans were made to borrowers with a prior bankruptcy in their credit history.

The other concerns listed, some of which are typical jumbo/mortgage risks, are the pool’s primary geographic concentration in California, multiple loans to a single borrower, the originator’s relatively limited track record, the possibility of market value decline, and foreclosure and liquidation timelines.

“Roughly one-third of the pool is located in regions that Fitch believes to be  highly  overvalued,  though  the  overall  regional  concentration  has improved since EverBank’s first transaction," Brach said.