A pool of residential mortgages financing investor properties and second homes will collateralize $325.7 million in residential mortgage-backed securities (RMBS) from the EFMT 2026-AE1.
Although investor properties, which are prone to higher chances of default, account for 58% of the pool, analysts at Kroll Bond Rating Agency point out. Yet those chances of credit stress are mitigated by the strong borrower and collateral quality, KBRA analysts said.
A February 3 closing is expected for EFMT 2026-AE1, which will sell notes through senior, class A notes and six subordinate class B notes, the rating agency said.
Repayment will start with exchangeable principal and interest certificates, then principal to classes A4, A10 and A12 sequentially, until they are paid odd. EFMT will then move to paying off the class B certificates, KBRA said.
The notes have a final maturity date of November 2060, KBRA said. Asset Securitization Report's deal database also finds that coupon rates will include 0.43% on the exchangeable notes, rates Aa1/AA+ from Moody's/KBRA; 5.5% on the notes rated Aaa/AA; and 6.93% on the subordinate notes with varying ratings.
As for who is leading the deal, Bank of America Merrill Lynch and Citigroup Global Markets, are on as managers and initial note purchasers, KBRA said. Meanwhile, PennyMac Loan Services, Cornerstone Servicing and loanDepot.com will service the underlying collateral, KBRA said.
EFMT's credit profile is built on a strong and diversified underlying pool and borrower credit, KBRA. The 887 fixed-rate, fully amortizing loans have an average balance of $367,237, while the deal's aggregate top five balances represent only 1.7% of the pool balance.
On a weighted average (WA) basis, borrowers have an original FICO score of 771, a debt-to-income ratio of 36.7% and original loan-to-value (LTV) ratio of 77.1%, the rating agency said.
KBRA assigns AAA ratings to the A4 through A13 tranches; AA+ the A14, A15 and A30 tranches; AA- and A- to the B1 and B2 notes, respectively; and BBB, BB+ and B+ to the B3, B4 and B5, respectively.
