KBRA Announces Ratings for New Mortgage Trust 2025-NQM1

KBRA Assigns Preliminary Ratings to HOMES 2025-NQM1 Trust

In a noteworthy development, KBRA has assigned preliminary ratings to nine classes of mortgage pass-through certificates associated with the HOMES 2025-NQM1 Trust. This transaction is sponsored by APF II Resi O4B, LLC, part of Ares Alternative Credit Management LLC. Valued at $332.4 million, this RMBS transaction is backed by a diverse pool of 717 residential mortgages, which include both fixed-rate and hybrid adjustable-rate mortgages. Specifically, fixed-rate mortgages represent 97.4% of the pool, while adjustable-rate options account for the remaining 2.6%.

Understanding the Composition of the Trust

It's important to note that a significant portion of the collateral involved is regarded as 'non-prime'. In fact, 92.5% of the loans fall into this category, showcasing a notable concentration. A substantial proportion of these loans, about 51.5%, are classified as non-qualified mortgages (Non-QM). An additional 47.4% are exempt from the Ability-to-Repay/Qualified Mortgage (ATR/QM) rule as they are originated for non-consumer loan purposes. The composition of this pool includes loans from major originators such as OCMBC, Inc. (LoanStream) comprising 41.2%, Angel Oak Mortgage Solutions LLC at 37.1%, and Hometown Equity Mortgage, LLC at 15.1%.

Comprehensive Rating Methodology

KBRA's ratings stem from a detailed loan-level analysis of the mortgage pool. This analysis employs the Residential Asset Loss Model (REALM), alongside reviews of third-party due diligence on loan files. Furthermore, cash flow modeling is employed to evaluate the transaction’s payment structure, while also reviewing significant transaction parties and their legal documentation. Such methodologies offer transparency and reliability, critical for stakeholders involved in this sector.

Accessing Ratings Information

For all interested parties seeking access to the ratings and associated documents, comprehensive information can be found on KBRA’s official website. Although the content has been structured to be informative, users are encouraged to refer directly to KBRA's resources for detailed understanding.

Exploring Recent Publications and Methodologies

KBRA frequently updates its methodologies and publications to reflect the dynamic nature of the market. Recent documents include evaluations about the RMBS KCAT and detailed assessments pertaining to the HOMES 2025-NQM1 Trust Tear Sheet. These resources are instrumental in understanding the broader context of such transactions and the methodologies used for ratings.

About KBRA

Kroll Bond Rating Agency, LLC, commonly known as KBRA, stands as a reputable credit rating agency. It is recognized in various jurisdictions including the U.S., Europe, and specific regions within the UK. KBRA holds multiple certifications and designations as a rating agency, which underscores its commitment to transparency and diligent credit analysis.

Frequently Asked Questions

What is the HOMES 2025-NQM1 Trust?

The HOMES 2025-NQM1 Trust is a newly formed mortgage-backed securities transaction collateralized by a pool of residential mortgages.

Who sponsors the HOMES 2025-NQM1 Trust?

The trust is sponsored by APF II Resi O4B, LLC, which is part of Ares Alternative Credit Management LLC.

What are the primary types of mortgages in this transaction?

The pool primarily consists of fixed-rate mortgages, making up 97.4%, and hybrid adjustable-rate mortgages accounting for 2.6%.

What does 'non-prime' mean in this context?

'Non-prime' refers to loans that typically do not meet the criteria of prime mortgages, often due to factors like credit history and loan purpose.

How does KBRA conduct its rating assessments?

KBRA employs comprehensive methodologies including loan-level analysis, cash flow modeling, and assessments of transaction documentation and parties involved.

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