AD Mortgage's securitization vehicle has been experimenting with what analysts called a novel combination of loan features in the non-qualified mortgage market.
The trend has shown up in a small percentage of second liens in recent deals, including ADMT's sixth non-QM transaction, a $411.3 million securitization that received preliminary ratings from KBRA and Fitch presale reports. Ratings ranged from a top AAA to a low-end speculative B-minus.
"It is typical for us to have a low single digit percentage of seconds in our deals. It is very much in line with our history and within rating agency guidelines. Our seconds offer a solid risk-adjusted return considering slightly higher yield but a much more conservative LTV profile," said Dmitri Batsev, managing director and general partner of Imperial Fund Asset Management, AD Mortgage's securitization affiliate.
Of the 1,043 loans in ADMT 2026-NQM6, 3.3% were second-lien loans, some of them themselves non-QM. KBRA called that combination of alternative documentation and second-lien priority "a layering of risk that is not typically present in non-QM transactions."
The extent to which the convergence in growing home equity and alternative documentation loans can be funneled into the securitized market, and how these products are received there, is being closely watched because it plays a role in the pricing and underwriting of these loans.
Broader trends and deal features
Overall, excess spread in mortgage securitizations has been falling over the last two years, according to a source at KBRA. This could be due to the net effect of mortgage rates changing or collateral shifting, including the amount of DSCR in a particular deal, as well as the return demanded by investors for the various classes of securities being issued.
S&P Global Ratings has forecast a
Estimated first half non QM securitization issuer rankings Whole Loan Capital has compiled based on rating agency presale reports suggest A&D has been a top 10 player this year and gaining ground.
The inclusion of home equity products in a rated non QM securitization is not new for A&D as four of the 2026 deals had second liens noted in their rating reports. The share has run from 3.3% on this deal to 4.8% in March, with 4.6% on the January deal and 4.1% in May.
Instead of traditional W-2s or tax returns, about 75.6% of the loans in the deal use alternative income proof, such as 12–24 months of bank statements or property cash flow.
Despite using non-traditional paperwork, the borrowers generally have strong credit profiles. The weighted average FICO score is 749, and the average combined loan-to-value ratio is 69.3%
Over 24.8% of the mortgages are located in Florida, and the top 3 metro areas New York, Miami, Los Angeles, all of which make up 44.3% of the entire deal.
About 38.4% were underwritten using
