KBRA Assigns Preliminary Ratings To Non-QM Offering VERUS 2022-7

KBRA Assigns Preliminary Ratings To Non-QM Offering VERUS 2022-7

Approximately 60% of the loans pooled in the $489.8 million non-prime RMBS transaction are categorized as Non-QM.

KBRA said Tuesday it has assigned preliminary ratings to four classes of mortgage pass-through notes from Verus Securitization Trust 2022-7 (VERUS 2022-7), a $489.8 million non-prime residential mortgage-backed securities (RMBS) transaction. 

The underlying collateral, comprising 791 residential mortgages, is characterized by a significant concentration of loans underwritten using alternative income documentation. Borrowers in the subject pool possess a non-zero weighted- average (WA) original credit score of 736 and exhibit moderate equity in each mortgaged property, with a combined loan-to-value (CLTV) ratio of 71.5%.

Approximately 60% of the loans were categorized as non-qualified mortgages (Non-QM) under the Ability-to-Repay/Qualified Mortgage (ATR/QM) rule. The remaining loans were exempt from the ATR/QM rule due to being originated for business purposes (40%).

The mortgage loans were seasoned approximately 3.5 months, and include both fixed-rate mortgages (86.5%) and adjustable-rate mortgages (13.5%). Additionally, approximately 28.6% of the pool has an initial interest-only period. 

KBRA assigned the preliminary ratings as follows:

KBRA’s rating approach incorporated loan-level analysis of the mortgage pool through its KBRA RMBS Credit Model, an examination of the results from third-party loan file due diligence, cash-flow modeling analysis of the transaction’s payment structure, reviews of key transaction parties, and an assessment of the transaction’s legal structure and documentation. 

The collateral consists of mortgages originated by various lenders, only one of which comprises more than 10% of the pool — Castle Mortgage Corp., with 13%. All loans in the transaction will be serviced by New Rez LLC d/b/a Shellpoint Mortgage Servicing (90.5%) and Fay Servicing LLC (9.5%).

Read the full report at www.kbra.com (registration required).

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Sink Or Swim: Which Areas Are Destined To Survive The Recession?

The outcome won’t be the same across the nation — some areas

Sink Or Swim: Which Areas Are Destined To Survive The Recession?

The outcome won’t be the same across the nation — some areas will show resilience and others will come tumbling down. 

Everyone expects home-buying demand to taper off, especially within pandemic sales hotspots, but it’s harder to predict which areas will be the most resilient in the face of a looming recession. 

A new report from Redfin tells us the obvious: Popular migration destinations where home prices soared during the pandemic are most likely to see the effects of a housing downturn amplified and home prices decline year-over-year if the economy goes into recession. Yet, the report also found that relatively affordable northern metros are most resilient in the event of a recession.

The housing market is changing rapidly with many factors having an effect, including inflation, interest rates, inventory, and median income. Yet, the outcome won’t be the same across the nation — some areas will show resilience, while others will come tumbling down. 

The U.S. housing market slowed in the spring, with 5.5%-and-higher mortgage rates sending many buyers to the sidelines and cooling competition. The market has already slowed from its pandemic peak, and now many predict a recession. Redfin analyzed which metros are most susceptible to home-price declines if the country officially enters a recession, as well as which are most resilient to an economic downturn.

Redfin’s analysis covers housing markets in the 98 U.S. metros where sufficient data was available, and uses several housing-related indicators for each metro — including home-price volatility, average debt-to-income ratio, and home-price growth. Each metro is then assigned an overall risk score, relative to the other metros in the analysis: 100 represents the highest likelihood of a housing downturn, including year-over-year home-price declines, while 0 represents the lowest likelihood. 

Areas Destined To Fall

Migration destinations with rapidly rising home prices are most at risk of a continued housing downturn.

Riverside, Calif., has the highest chance of seeing its housing market cool further if the U.S. enters a recession. It has an overall risk score of 84 — the highest of any major U.S. metro. A combination of housing and economic data indicates it’s more likely than any other metro to see prices decline year-over-year during a recession or continued economic downturn. This is mainly due to the area’s highly volatile home prices, and it was a hot destination during the pandemic, both for relocating buyers and second-home buyers.

Riverside is followed by Boise, Idaho (76.9 risk score); Cape Coral, Fla. (76.7); North Port, Fla. (75); and Las Vegas (74.2). Sacramento, Calif. (73.1); Bakersfield, Calif. (72.2); Phoenix (72); Tampa, Fla. (70.7); and Tucson, Ariz. (70.1) round out the Top 10.

Many of these markets are popular migration destinations and/or places with rapidly rising home prices, both factors that are major contributors to their risk of suffering from a housing downturn. Additionally, Boise, Cape Coral, North Port, Las Vegas, Sacramento, and Phoenix were all among the 20 fastest-cooling markets as of May, when mortgage rates hit 5.5%. This likely tells us prices are more likely to drop in many of those metros as the economy continues to contract. 

The most at-risk metros have also experienced outsized price growth. North Port, where home prices increased 30.5% from last year in May, has the nation’s fastest growing prices, followed by Tampa (28.1%) and Las Vegas (26.8%). Nine of the 10 most at-risk areas have faster-growing home prices than the national median — except for Sacramento, but  home prices rose more than 40% there during the pandemic, reaching $610,000 in May 2022. 

Some of the most affordable areas in the nation became one of the most expensive during the pandemic, partly due to the influx of people moving in from other areas. This includes Boise, where the median home price grew from $330,000 to $550,000 from May 2020 to May 2022. Phoenix experienced a similar effect; it went from $300,000 to $485,000.

“Boise’s market is already turning around, as a lot of the people who moved to Idaho during the pandemic are either moving back to their hometowns or cashing in and moving to more affordable places,” said Boise Redfin agent Shauna Pendleton. “The housing market was hot during the pandemic, largely because of out-of-town buyers. Sellers are asking me if the cash buyers from California are still around, hoping they’ll swoop in and offer to buy their home for more than the asking price — but that’s not happening much anymore, and the cash buyers who are in the market are often offering below the asking price.”

“I don’t expect home values to plummet, but we do need to come down from the clouds at some point and sellers need to adjust their expectations to the new reality,” Pendleton continued. “There are more homes on the market, fewer buyers, and a higher chance that buyers can’t pay the asking price because their monthly payments have shot up due to rising rates.”

Areas Destined To Rise

Relatively affordable Rust Belt metros are predicted to be the most resilient in the face of a recession.

Akron, Ohio, has the lowest chance of a housing downturn if the U.S. enters a recession, with an overall risk score of 29.6, the lowest of any major U.S. metro. What makes Akron more resilient are low home-price volatility, low debt-to-income ratio, relatively few second homes and the fact that homes there are unlikely to be flipped. 

Akron is followed by Philadelphia, with an overall risk of 30.4; Montgomery County, Pa.; (31.4); El Paso, Texas (32.2); and Cleveland (32.4). Cincinnati (32.6); Boston (32.6); Buffalo, N.Y. (33.1); Kansas City, Mo. (33.4); and Rochester, N.Y. (34) to round out the Top 10.

Nearly all of these metros are affordable, with relatively slow-increasing prices that would shield their housing markets in the event of a recession. Prices rose slower than the national median in nine of the 10 most resilient metros (El Paso is the exception.) 

Seven of the 10 least at-risk metros had a median sale price lower than $300,000 in May, and in nine of them it’s lower than the national median of $431,000. Affordability is great to have during a recession because it means people are more likely to buy homes, and those places may attract people from out of town looking for lower prices.

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Nations Lending Continues Midwest Growth With New Illinois Branch

Nations Lending Continues Midwest Growth With New Illinois Branch

Company hires Brian Augustine to lead efforts.

Nations Lending, a full-service national mortgage lender, announced that seasoned loan veteran Brian Augustine has been hired to lead a new branch in Crystal Lake, Ill. The location will serve homeowners in McHenry County, Ill. Augustine will serve as the branch manager.  

Augustine comes to Nations Lending from Guaranteed Rate, where he most recently worked as a vice president of mortgage lending. His day-to-day work earned him a spot on Mortgage Executive Magazine’s Top 1% Mortgage Loan Originator in America list in 2020 and 2021. Before entering the mortgage lending industry in 1993, Augustine earned his Bachelor of Arts in Economics from Northern Illinois University.  

"Our target is to gain massive market share in our community, provide exceptional service, and grow careers in an environment of giving back,” said Augustine. “What drew me to Nations was the company’s focus on striving for excellence to best serve its clients but still maintain that family atmosphere that is so important to me.” 

“Brian is an incredibly valuable addition to our team and his experience and drive will help us grow in this area,” said Corey Caster. “We’re thrilled to welcome him to the team and know he’s capable of leading this branch.”

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Ribbon Expands into Kentucky; Now In 15 States

Cash-offer fintech expands

Ribbon Expands into Kentucky; Now In 15 States

Cash-offer fintech expands to Louisville market with partner Finish Line Realty.

Ribbon, a tech-enabled company that helps homebuyers make all-cash offers, said today it has expanded into Kentucky, allowing Kentucky homebuyers to make all-cash offers with RibbonCash.

Kentucky represents a major milestone, as it becomes the 15th state in which Ribbon operates. With the addition of Kentucky, Ribbon has now expanded into eight states this year. The company says it expects to be in half of the U.S. states by the end of 2022. 

Hopes of homeownership have dwindled for many in the face of rising interest rates and increased competition from wealthy investors. Home sales in Louisville rose 3.5% in June 2022 compared to last year, selling for a median price of $211,000, Ribbon said. With high mortgage rates causing additional disruption, buyers lean on real estate brokerages to get the most value for their purchase while sellers prioritize certainty in the transaction, Ribbon said.

"Buyers in the market are swimming against a current of fluctuating costs, rising rates, and low inventory,” said Shaival Shah, Ribbon co-founder and CEO. "At Ribbon, we advocate for everyday people who want to own a home — not investors. We're leveling the playing field by equipping buyers with the most powerful offer in real estate and working directly with their agent and loan officer of choice. Further, sellers can feel confident that their deal will close, so they can move on to the next chapter."

With RibbonCash Offers, homebuyers can make an all-cash offer on a home, waiving mortgage, appraisal, and home sale contingencies. Ribbon's guaranteed close gives buyers, sellers, and agents added predictability, the company said.

Ribbon said its RibbonCash Offers are guaranteed to close, providing sellers certainty even in the most competitive and volatile markets. In a time of fluctuating interest rates, buyers utilizing Ribbon can shop around for the best mortgage rates, elevate their home purchase options, and bid with confidence for the home of their dreams using the most powerful offer in real estate, Ribbon said.

The company said it works directly with real estate professionals and lenders who remain key advocates for buyers and sellers. Ribbon said it is partnering with Finish Line Realty in Louisville. Finish Line Realty can now provide all-cash, non-contingent offers on homes that pass inspection to its customers — empowering them to more effectively compete with the institutional investors snapping up residential homes and driving up prices beyond actual value, Ribbon said. 

“Finish Line Realty’s goal is to help everyday buyers achieve their home ownership goals in Louisville’s challenging housing market,” said Scott Hack, broker/owner at Finish Line Realty. “Leveraging Ribbon’s all-cash offers allows us to make the American Dream, with all its traditions, a reality for more of our clients.”

In addition to Kentucky, Ribbon operates in Alabama, Arkansas, Colorado, Florida, Georgia, Indiana, Missouri, North Carolina, Ohio, Oklahoma, South Carolina, Tennessee, Texas, and Virginia.

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