BINOM launches its MBS of seasoned, performing and re-performing loans

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BREDS IV Residential Holdco is sponsoring its first mortgage-backed, senior-rated mortgage-backed securities (MBS) transaction, secured by performing and re-performing loans, by issuing the notes through the BINOM Securitization Trust 2022-RPL1.

BINOM Securitization Trust will issue $310,070 in MBS, according to DBRS Morningstar, which is expected to assign ratings to the notes. The notes are backed by 1,887 loans.

For this transaction, DBRS explained, the mortgages have approximately 176 months to mature. By the deadline, January 1, 94.1% of the pool is current and 5.9% is 30 days past due using the Mortgage Bankers Association (MBA) past due method.

The sponsor, owned by private equity fund Blackstone Real Estate Debt Strategies and a majority-owned subsidiary of BREDS IV Residential Holdco, will retain an eligible vertical residual interest of 5% consisting of at least 5% of each class of notes other than Class Notes R, in accordance with the risk retention requirements of the Dodd-Frank Act.

Note ratings range from “AAA” on the $211 Class A senior notes to “B” on the $7.4 million subordinate Class B2 notes. The ratings on the three mezzanine classes range from “AA” on the M1 class to “BBB” on the M3 class.

Among the highlights of the deal, the current weighted average (WA) combined loan-to-value ratio of the underlying collateral is 65.2%, the rating agency said.

Third parties performed due diligence on various aspects of the wallet, including regulatory compliance, modification, payment history and cash flow management.

Additionally, all loans in the pool have been seasoned for over 24 months and have been outstanding for over 14 years. DBRS believes that the loans include borrowers who have demonstrated a willingness to stay in their homes through various economic cycles.

However, BINOM Securitization Trust is not without its challenges. It uses a framework of representations and warranties that DBRS Morningstar finds acceptable, but a number of weaknesses abound. For one, there is an optional review trigger, and the representations and warranties provider is not rated.

Almost all of the loans in the pool, 97.1%, are financed with fixed rate products and approximately 91.4% of the origination balances concern principal residences. According to DBRS, an additional 1.7% are second homes and 6.9% are investor-owned properties. The average loan balance in the pool is $164,319. On a WA basis, the coupon is 4.3% and the FICO score is 670.

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