FirstKey Mortgage is returning to sponsor a securitization of revenue from a pool of performing and reperforming mortgages, raising $465.5 million.
The deal, Towd Point Mortgage Trust series 2026-2, expects to pay coupons of 4.53% on the A1A through B4 notes, virtually all the notes in the capital structure. They have a final maturity date of July 2066, according to ratings analysts at Fitch Ratings.
Class A1A, rated AAA from Towd Point Mortgage Trust, series 2026-2, benefits from a credit enhancement level of 15.00%, Fitch said. Classes A1B, rated AAA, benefit from a credit enhancement level of 6.25%; and class A2, with a rating of AA-, benefits from a credit enhancement level of 4.05%, Fitch said.
The mezzanine classes, M1 and M2, offer coupons of 2.75% and 1.80%, respectively, according to Fitch. Among the subordinate classes, credit enhancement levels ranged from 1.10% on the B1 class of notes to 0.20% on the B4 tranche, Fitch said.
Towd Point 2026-2's portfolio is composed of 1,729 mortgages, and a majority of the loans, 57.0%, underwent third-party due diligence reviews, according to Fitch.
U.S. Bank National Association and Third-Party Mortgage Servicing originated the underlying loans, primarily, while Select Portfolio Servicing and Shellpoint Mortgage will service the mortgages, the rating agency said.
J.P. Morgan Securities is the lead underwriter on the deal, and aside from the due diligence reviews, the mortgage pool displays several other high-quality traits.
On average, the loans have a balance of $269,258, a weighted average (WA) current coupon of 4.9%, and a WA original loan-to-value (LTV) ratio of 71.3%.
Borrowers have a model FICO score of 732, and an original debt-to-income (DTI) ratio of 35.9%.
Primarily, the mortgages were underwritten using full documentation (74.4%) to finance a primary residence (88.3%), Fitch said.
Outside of the class A notes, Fitch assigned A- and BBB- to the classes M1 and M2 notes, respectively. Classes B1 and B2 received ratings of BB- and B-, respectively.
