Investment property backs $418.4 million MBS offering from Oceanview

A pool of mortgage loans designated for the borrowers’ investment purposes will collateralize a $418.4 million mortgage-backed securitization (MBS), in the latest deal from the Oceanview Mortgage Trust, 2022-INV6.

Borrowers financed the properties through first-lien, fixed-rate mortgage loans, most of which were on 30-year terms extended to prime borrowers, according to a presale report from Moody’s Investors Service. Single-family houses and multifamily buildings make up the vast majority (89.6%) of the pool, by mortgage balance, according to Kroll Bond Rating Agency.

BofA Securities and Stifel Nicolaus are the initial note purchasers on the deal, which will issue the notes through a senior-subordinate structure with a shifting interest payment priority. KBRA says it expects the deal to close on April 29.

Oceanview will issue the bulk of the notes from ‘AAA’ rated super senior tranches totaling $355.7 million, with initial tranche credit enhancement (CE) of 15%. The ‘AAA’ senior support notes, amounting to $31.3 million, will have an initial tranche CE of 7.5%.

The deal’s credit supports include a delinquency trigger and cumulative loss triggers.

Community Loan Servicing has been named as the servicer on the deal, according to KBRA. Outside of the super senior and senior support notes, The rating agency plans to assign ratings of ‘AA+’ to the $5.8 million B-1 class; ‘A+’ to the $9.4 million B-2 tranche. Ratings on the rest of the notes will range from ‘BBB+’ on the $4.1 million to ‘B-’ on the $1 million on the B-6 notes.

Moody’s intends to assign ratings ranging from ‘Aaa’ through ‘Baa3’, it said.

The collateral pool consisted of 1,140 loans sized $367,101 on average, said KBRA. The pool is also fairly diversified, as the top 20 borrowers make up 6.1% of the pool, according to Moody’s.

On a weighted average (WA) basis, the loans have an original term of 360 months. Borrowers, on a WA basis, had an original KBRA credit score of 769, original loan-to-value ratio (LTV) of 67.7%, and a debt-to-income ratio of 36.3%, according to KBRA.

Also, about 23.4% of borrowers in the pool were self-employed, with a median non-zero medial annual income of $165,225.