Fitch Ratings says it has assigned expected ratings to residential mortgage-backed notes to be issued by the New Residential Mortgage Loan Trust 2022-NQM3 (NRMLT 2022-NQM3).

The notes are backed by 595 new loans which have a balance of $346.1 million as of the April 1, 2022 deadline. The pool consists of loans issued by NewRez LLC, formerly known as New Penn Financial LLC, and Caliber Home Loans, a subsidiary of NewRez.

The Notes are secured primarily by Non-Qualified Mortgages (Non-QM) as defined by the Repayment Capacity Rule (ATR). Of the loans in the pool, 71.8% are designated as non-QM, while the rest are not subject to the ATR rule.

Fitch has set the expected ratings as follows:

  • A-1: AAA
  • A-2: AA
  • A-3: A
  • M-1: BBB
  • B-1: BB
  • B-2: B
  • B-3, A-IO-S, R, XS-1, XS-2: Not classified.

Based on his updated view of sustainable home prices, Fitch said, he sees home price values ​​in this pool as 9.7% above a long-term sustainable level (compared to 9.2% in the past). national level in April 2022). Underlying fundamentals are not keeping pace with price growth, which is the result of an imbalance between supply and demand driven by low inventory, low mortgage rates and new buyers entering the market. market. These trends have led to significant increases in home prices over the past year, with home prices up 18.2% year-over-year nationally in December 2021.

According to Fitch, borrowers have a stronger credit profile compared to other non-QM deals. The pool consists of 66.7% loans where the borrower maintains a primary residence, while 33.3% is considered investor property or secondary residence. Only 32% of loans came from a retail channel.

NewRez and Caliber originated 100% of the loans, which were serviced from the outset by Shellpoint Mortgage Servicing (SMS).

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