WinWater Home Mortgage's first prime jumbo securitization of the year is backed by a mix of 15-year and 30-year loans, according to DBRS.
WinWater Mortgage Loan Trust 2016-1 is backed by 510 loans with a total principal balance of $407.9 million. The trust will issue multiple senior classes of certificates backed by either a pool of 30-year fixed-rate mortgages or a pool of 15-year fixed-rate mortgages. The trust will also issue subordinate certificates that will be cross-collateralized between the two pools. This is generally known as "Y-Structure," according to DBRS.
Originators for the 30-year mortgages include Caliber Home Loans (12.6%), Ditech Mortgage Corp. (9.7%), LoanDepot.com (8.1%), Stonegate Mortgage Corp. (7.2%) and various other originators, each comprising less than 5% of the total.
Originators for the 15-year mortgages include Ditech (13.5%), Banc of California (11.7%), Homeowners Financial Group (11.4%), LoanDepot (7.2%), Mega Capital Funding (6.3%) and various other originators, each comprising less than 5% of the total.
All of the loans will be serviced by Cenlar. Wells Fargo Bank will act as the master servicer, securities administrator and custodian.
DBRS' presale report does not indicate the respective balances of the two pools of mortgages. However, it notes that borrowers of 15-year loans have historically exhibited better performance for their ability to assume higher monthly payments than their 30-year counterparts. Also, the faster amortization of 15-year loans builds equity more rapidly, thus resulting in lower default risk.
The ratings agency assigned a preliminary AAA to all of the senior classes, though some of these classes benefit from 15% credit enhancement and some from only 7.5%.
Among other risk factors, approximately 6% of the loans are to finance second homes, which represent slightly higher default risk relative to owner-occupied loans; however, the liquid reserves of these borrowers is substantial. There are no investment properties in this pool.
Further adding to risk, approximately 46% of the borrowers have more than one mortgaged property, and there is one borrower with two mortgaged properties in the deal.
