KBRA Assigns Ratings to FIGRE Trust 2024-SL1 (FIGRE 2024-SL1)
KBRA has recently announced the assignment of preliminary ratings to six classes of mortgage-backed notes from FIGRE Trust 2024-SL1, valued at $220.1 million. This transaction is backed by Figure Lending LLC and is primarily comprised of home equity lines of credit (HELOCs). The structure of the underlying loans features first lien (11.4%), second lien (84.6%), and third lien (4.0%) classifications, constituting a well-balanced risk profile.
Understanding the Loan Pool
The loan pool supporting the FIGRE 2024-SL1 transaction is notably seasoned, having an average seasoning period of twenty-eight months. It consists of 4,504 draws from 2,846 credit lines. All loans in this pool feature fixed rates and are fully amortizing, making them predictable for both borrowers and investors.
Loan Characteristics and Utilization Rates
Borrowers have utilized $220.1 million out of a total of $241.2 million in available credit, resulting in a current weighted average draw percentage of 92.8%. The maturity terms for these HELOCs vary: 30-year terms account for 63.3% of the loans, followed by 15-year terms at 20.8%, 10-year terms at 14.2%, and 5-year terms at 1.7%. Each term has a corresponding draw period, ensuring flexibility in repayment and usage.
Transaction Structure and Risk Management
The deal structure of FIGRE 2024-SL1 incorporates an excess spread mechanism alongside a sequential interest waterfall, as well as a hybrid principal payment waterfall that combines pro-rata and sequential payment methods. This structured approach ensures that losses are absorbed in a manner that begins with the Class B-3 Notes and cascades down to the Class A-1 Notes, thereby protecting senior classes from potential losses.
Reserve Accounts and Future Borrowing
To further bolster this structured transaction, the deal features a Reserve Account dedicated to funding borrower draw requests. This account is fully funded and has the capability to be replenished to target amounts through the waterfall mechanism. Such provisions are essential for maintaining liquidity and addressing borrower needs effectively.
Accessing Key Documents and Reports
Investors and interested parties can access the relevant documents associated with these ratings directly through specified platforms. This includes comprehensive reports that delve into the details of the rating process and methodology employed by KBRA.
About Kroll Bond Rating Agency (KBRA)
Kroll Bond Rating Agency, LLC (KBRA) serves as a full-service credit rating agency, recognized within the industry for its transparency and comprehensive methodologies. Registered with the U.S. Securities and Exchange Commission as an NRSRO, KBRA operates globally, including its branches in Europe and the UK. Additionally, it has been accorded recognition by various regulatory authorities, ensuring that it meets high standards of credit rating services.
Frequently Asked Questions
What are the preliminary ratings assigned by KBRA to FIGRE Trust 2024-SL1?
KBRA has assigned ratings to six classes of mortgage-backed notes as part of the FIGRE Trust 2024-SL1 transaction.
How large is the FIGRE Trust 2024-SL1 transaction?
The transaction totals $220.1 million, backed by home equity lines of credit originated by Figure Lending LLC.
What is the average seasoning period of the loans in this transaction?
The underlying loan pool has an average seasoning period of twenty-eight months.
How have the borrowers utilized their credit lines?
Borrowers have utilized 92.8% of the total available credit of $241.2 million, drawing $220.1 million as of the cutoff date.
What is the role of the Reserve Account in this transaction?
The Reserve Account funds borrower draw requests and is designed to be fully funded, allowing for replenishment to target amounts through the transaction's waterfall mechanism.
