A large pool of mortgages on investment residential properties will secure $296.2 million in residential mortgage-backed securities (RMBS) through the transaction named DRMT 2026-INV2.
Processing Content
RCF III TRS is the deal’s sponsor and Deephaven, which focuses on originating and acquiring non-traditional home loans. Selene Finance will service the entire pool, which also received third-party due diligence review, according to Kroll Bond Rating Agency
The underlying mortgages in DRMT 2026-INV2 were aggregated from multiple lenders and underwritten using alternative documentation sources, including debt service coverage ratio (DSCR) from rental income and 12 to 23 months of bank statements, KBRA said.
Full documentation was only applied to 2.6% of the underlying pool of mortgages. Debt-to-income, however, was 23.3% when it was applied, the rating agency said.
The deal will issue the RMBS through around eleven tranches of class A, M and B notes, KBRA said. All the A1 notes benefit from credit enhancement levels that equal 33.45% of their respective note balances, except the A1A tranche, which enjoys credit coverage of 43,45%, KBRA said.
DRMT 2026-INV2 will repay principal to senior note investors on a pro rata basis, except for the A-1FCF and A-1LCF notes, which will be paid sequentially. Otherwise, if a performance trigger is in place, principal will be paid sequentially, beginning with the most senior notes.
The mezzanine and subordinate notes will be shut out from receiving any principal, until the senior notes are repaid, and then distributions to the subordinate notes will begin, sequentially.
For credit support, DRMT also benefits from monthly excess cash flow , KBRA said.
KBRA assigns ‘AAA’ to the A1 notes; AA+ to the A2 noes; A to the A3 notes; BBB+ to the M1 notes; BB+ to the B1 notes and B to the B2 notes.
