EverBank latest RMBS deal reveals strong credit quality
EverBank Financial Corp is keeping its word.
The company told HousingWire after its first deal that it would become a regular issuer in the residential mortgage-backed securities market as it returns.
Thus, EverBank is issuing its second private-label RMBS deal — EverBank Mortgage Loan Trust 2013-2 — which demonstrates high quality credit features such as low loan-to-value ratios, strong borrower credit and fully documented loans.
The transaction’s original weighted average combined loan-to-value ratio is 67.7%, indicating substantial equity in the property – providing a good cushion to attract investors.
The transaction is expected to report a total balance of $303.3 million and will contain 367 loans in the deal with the weighted average borrower credit score of 776.
DBRS pre-rated the deal, giving the majority of the tranches AAA ratings.
Fitch Ratings also pre-rated the transaction, with the expected outlook slated as 'stable,' giving the majority of the tranches AAA ratings.
Overall, the collateral pool consists of high-quality mortgages.
The majority of the pool, roughly 87%, consists of 30-year fixed-rate mortgages. The remaining 13% will be comprised of 15-year FRMs.
EverBank will be the servicer for every loans. Additionally, Wells Fargo (WFC) will act as the master servicer, securities administrator and custodian for the deal.
With EverBank attempting to stake its claim in the RMBS sector, various challenges are expected to rise since the bank has a slim track record.
"Primarily a whole loan seller, EverBank is a relatively new securitizer of prime jumbo loans and, as a result, has limited performance history on these loans," DBRS explained.
Another concern for the deal by both credit ratings agencies is the Everbank as a nascent provider of representation and warranties.
As a result, EverBank (EVER) may experience financial stress that could result in the inability to meet its repurchase duties as a result of breaches of reps and warrants.
Meanwhile, Fitch noted its concern with the platform’s geographic concentration.
The mortgage pool’s primary concentration risk is in California, where nearly 50% of the properties are located.
"Roughly one-third of the pool is located in regions that Fitch believes to be overvalued by 18% through 33% above sustainable levels, including Los Angeles, San Jose, and Santa Ana, CA. The high market value decline projections are key contributors to Fitch‟s default and loss risk assessment of this pool," Fitch explained.