Securitization

Longbridge Financial's Christopher Mayer discusses the mortgage industry's opportunities in today's market and its shortcomings when serving older Americans.

The deal has an extensive capital structure, which is expected to repay investors sequentially, with notes enhanced by subordination.

Cross 2025-H3 has moderate leverage, according to KBRA, with a weighted average (WA) loan-to-value ratio of 72.3%, and a debt-to-income ratio of 33.5%.

The notes will get credit enhancement from balances on the subordinate bonds, which are permitted to amortize.

Moderate leverage is one example of cleaner credit, as the current collateral pool's original loan-to-value (LTV) ratio is 69.1%, down from 71.7% on the 2024-NQM1 series.

The impact of tariff policy on the mortgage-backed securities market is likely to surface first in the cost of new housing construction.

The underlying prime mortgages have an average balance of $358,024, a weighted average (WA) original FICO score of 776, an original cumulative loan-to-value (LTV) ratio of 73.6%.

The deal is composed of 11,547 seasoned performing and reperforming loans that are first and second lien. Loan servicing includes a 180-day chargeoff feature.

ACHM 2025-HE1 will repay notes using a pro-rata, sequential pay structure that must satisfy an overcollateralization test, and cumulative loss and delinquency triggers.

Second-lien loans make up virtually the entire pool, which carries some risk of poor recovery rates. Yet 78% of the pool is also considered safe-harbor mortgages.