Woodward Capital Management and AG Mortgage Investment Trust is sponsoring a $524.1 million residential mortgage-backed securities (RMBS) deal, selling notes through the RCKT Mortgage Trust 2025-CES11.
Rocket Mortgage originated the asset pool of 5,669 second lien loans, which have an average balance of $92,455, analysts at Fitch Ratings.
The latest RCKT Mortgage Trust series will issue the RMBS through eight classes of exchangeable notes. The deal is expected to close on November 20, with a final maturity date of November 2055, said Kroll Bond Rating Agency, which also assessed the deal.
Citigroup Global Markets, Wells Fargo and Bank of America are initial note purchasers, according to KBRA.
Among the deal’s potential credit risks are the second-lien mortgages themselves, which normally have a high expected loss severity, KBRA said. Also, potential future home prices declines are another potential credit risk to the notes, KBRA said. But those seem to be significantly mitigated by several other factors.
For one, the borrowers appear to be of prime credit quality, with a weighted average (WA) model FICO score of 742. Leverage is also modest, with an original debt-to-income ratio of 39.6%, and a WA securitization loan-to-value ratio of 73.7%, Fitch said.
Both tranches of A1 notes will repay investors on a pro-rata basis, while the A2 through B3 tranches repay sequentially, KBRA said. Fitch analysts said the senior classes incorporates a 1.00% step-up coupon after the 48th payment date.
California accounts for the largest percentage of borrowers, with 14,3% of the pool balance, according to Fitch.
Fitch assigns ratings of AAA to the A1 notes; AA to the A2 notes; A to the A3 notes; BBB to the M1 notes; BB to the B1 notes; and B to the B2 notes.
KBRA assigns AAA to the A1 notes; AA+ to the A2 notes; A+ to the A3 notes; BBB+ to the M1 notes; BB+ to the B1 notes; and B+ to the B2 notes.
