New $269m Multifamily Securitization Assigned Triple-A by S&P
Standard & Poor's (S&P) assigned triple-A ratings to senior classes of Impact Funding's multifamily mortgage pass-through certificates, series 2010-1. The mortgage collateral for the securitization includes 178 affordable multi-family mortgages -- worth roughly $302m -- mostly secured by properties participating in the Low Income Housing Tax Credit program, S&P said in a pre-sale report this week. The triple-A status applies to two senior-most slices of the class-A tranche totaling $268.9m. The ratings are supported by a 10.95% level of subordination for the class-A certificates, which provide coverage for potential losses should any mortgage defaults occur, according to the credit-rating agency "In our opinion, the flow of funds provides sufficient control over revenues by the trustee so that certificate holders have what we consider to be adequate security," S&P said. The agency noted moderate leverage in the transaction, with a 69% loan-to-value ratio among the loans, which are well-seasoned at an average 60 months. None of the loans are delinquent. S&P noted some concerns with the transaction, including 23 underperforming loans with debt service coverage below 1.0x. There is also a heavy concentration of properties in California, with 57% of the loan pool distributed through the state. Additionally, the agency noted outdated third-party data due to the loan seasoning of he pool. S&P said at the time the issuer expected to sell $269m of class A-1 and A-2 certificates. The senior-level bonds priced 225 basis points over benchmark, according to Bloomerg Businessweek. The Impact deal comes after JP Morgan (JPM) sold $716.3m of commercial mortgage-backed securities (CMBS) bonds, marking the second deal of the year. Write to Diana Golobay.