APCA Resi 04B is preparing to sponsor a $445.3 million securitization of payments from a pool of residential non-prime loans, while including recently introduced senior first class flow (A-1FCF) and last cash flow (A-1LCF) tranches to the platform.
Those tranches enjoy the same level of credit enhancement, 24.70%, which also applies to the A-1 and A-1B classes, according to analysts at Fitch Ratings and S&P Global Ratings.
The A-1A tranche benefits from a credit enhancement level of 34.70%, Fitch and S&P said. Most of the tranches in HOMES 2026-NQM4 Trust will issue fixed-rate notes, with a final scheduled maturity of June 2061, according to Fitch ratings.
The A notes will issue the bulk of the notes, $335.35 million, according to the rating agencies.
HOMES 2026-NQM4 is expected to close on June 15, and notes will repay investors through a combination of pro rata on the senior tranches and sequentially on the mezzanine and subordinate notes, according to S&P and Fitch.
Bridgeway primarily originated, or purchased, the mortgages that will be included in the pool, Fitch analysts said. Also, NewRez and Select Portfolio Servicing are servicers on the mortgages, while Rocket Mortgage is master servicer, according to S&P.
Alternative documentation, particularly bank statements and P&L statements, account for the largest portion of the pool, 39.2%, followed by full documentation, which accounts for 32.7% of the pool, S&P said.
Self-employed borrowers represent a substantial percentage of the pool, 46.3%, the rating agencies said.
Yet other characteristics paint a picture of stronger borrowers, including a FICO score of 757 on a weighted average (WA) basis, a WA original term of 360 months, and a debt-to-income (DTI) ratio of about 35%, the rating agencies said.
Borrowers also had liquid reserves of $256,242 on a WA basis. The mortgages are primarily fixed rate, 93.8%, while adjusted rate mortgages (ARM) account for 6.2% of the pool and just 1.8% are interest only, the rating agencies said.
Fitch assigns AAA to the A1 tranches. S&P, meanwhile, assigns AAA to the A1 tranches; A to the A2 notes; BBB to the M1 notes; and BB and B to the B1 and B2 notes, respectively.
