[Update 1: Reflects deals yet to price.]

Nationstar Mortgage (NSM) to price five servicer advanced receivable transactions valued at $2 billion.

Five series were outlined in the Standard & Poor’s pre-sale report, with plans for each transaction to be backed by servicing fee advance receivables rather than mortgage payments. 

The receivables are created through the servicer’s advancing obligations under the designated servicing agreements and the growth of deferred servicing fees.

The Nationstar deal is being rating by S&P, with the majority of the tranches receiving AAA preliminary ratings.

The deals are being marketed as $450 million Advance Receivables-Backed Notes Series 2013-VF1, $409 million Advance Receivables-Backed Notes Series 2013-VF2, $153.3 million Advance Receivables-Backed Notes Series 2013-VF2, $350 million Advance Receivables-Backed notes Series 2013-T1, $350 million Advance Receivables-Backed Notes Series 2013-T2 and $300 million Advance Receivables-Backed Notes Series 2013-T3.

The designated prepayment model includes both loan- and pool-level recovery mechanisms for servicer advances. 

Additionally, the series noteholders will be paid from the reimbursement of the deferred servicing fees, escrow and corporate servicer advances by non-loan level and loan-level collateral.

Feature strengths identified throughout the deal include collateral with strong credit quality, the seller’s obligation to continue collateral until the full obligations of the notes are satisfied as well as the recovery and structural mechanisms of the underlying pools and servicing agreements.

However, there are feature weaknesses identified by the credit rating agency, including the legal risk in foreclosure – the foreclosure timeline within each state where the loans were originated significantly influences the timeline for recoveries or advance receivables. 

Earlier this year, Nationstar priced a securitization from its special purpose vehicle Nationstar Agency Advance Funding Trust for an estimated $900 million in mortgage servicer advance receivable-backed notes.