Two Harbors markets first private RMBS
Subsidiary Agate Bay sole depositor in long-awaited deal
The long-awaited private market residential mortgage-backed securitization for the young real estate investment trust Two Harbors is much closer to a reality.
Fitch Ratings announced plans to rate Agate Bay Mortgage Trust primarily as triple-A.
The approximate $434 million deal consist primarily of 30-year, fixed-rate mortgage to low-leveraged buyers with strong credit and loss reserves.
The average FICO is 770, and the typical household income is $350,747 annually, with about that amount tucked away in liquidity.
For example, the average loan-to-value is below 70%. The highest concentration risk is in California, but that is relatively low at 46.4%.
"A large portion of the pool was originated by lenders with limited non-agency performance history," Fitch said in a release. "While the significant contribution of loans from these originators is a concern, Fitch considers the credit enhancement on this transaction sufficient to mitigate the originator risk."
Clayton Holdings provided the due diligence and the firm found little wrong with the mortgages.
However Two Harbors Investment Corp., formed in 2009, does not have a huge track record for issuing RMBS. But Fitch is confident in management's extensive mortgage industry experience.
Further, the reps and warrants are a strong featured aspect such as the sponsor's repurchase obligations will also be guaranteed by its parent, Two Harbors, for the life of each loan.