A portfolio of non-agency, business-purpose mortgages will provide collateral for $331.5 million in residential mortgage-backed securities (RMBS), from sponsor RCF III TRS.
The transaction, DRMT 2026-INV1, is backed by a pool of 1,153 non-prime investment property mortgages, which have a moderate leverage levels of an original, combined loan-to-value (CLTV) ratio of 69.9%, according to Kroll Bond Rating Agency.
The RMBS deal will sell notes through nine tranches of classes A, M and B notes, according to KBRA. The deal has an expected closing date of February 5, with a final scheduled payment date of Dec. 26, 2070, S&P Global Ratings said.
In terms of origination and servicing, Deephaven Mortgage and Champions Funding originated 50.4% and 28.3% of the pool, respectively, while Selene Finance will service the underlying mortgages.
Wells Fargo Securities, Deutsche Bank Securities, Goldman Sachs, Nomura Securities and Pretium Securities are initial purchasers on the deal, KBRA said.
The notes will repay investors through a mix of pro rata on the senior notes and sequentially on the mezzanine and subordinate classes, S&P said.
Credit enhancement levels were 43.95% on A1A the senior notes, 33.95% on the A1B and A1 tranches; according to KBRA. Through the rest of the structure, the A2, A3, M1, B1 and B2 tranches benefit from enhancement levels of 26.7%, 14.4%, 8.8%, 5.0%, and 1.8%, respectively.
On average, the mortgages have a balance of $287,562, with a weighted average (WA) original term of 364 months, and a WA coupon of 7.16%. The pool appears to be diversified, with the top five balances accounting for 4.5% of the collateral, KBRA said.
KBRA assigns ratings of AAA to all the A1 tranches; AA+ to the A2 notes; A+ to the A3 tranche; and BBB+, BB+ and B+ to the M1, B1 and B2 tranches.
S&P assigns AAA to its A1 notes; AA and A to the A2 and A3 notes; and BBB, BB and B to the M1, B1 and B2 notes, respectively.
