Mortgage is preparing to sponsor a $370.7 million securitization of residential mortgages that are either non-qualified or underwritten for business purposes.
The GS Mortgage-Backed Securities Trust, 2025-NQM3, will sell the notes through seven tranches of class A, M and B notes, according to Morningstar DBRS. The collateral pool is composed of a mix of 939 first-lien loans, lent to highly qualified borrowers, and under tightened underwriting standards.
The deal, which is expected to close on August 29, will repay investors sequentially, and– if it avoids specific performance triggers related to cumulative loss or excessive delinquencies—pro-rates principal payments to the senior tranches, according to ratings analysts at Morningstar | DBRS.
All the notes have an expected final maturity date of November 2065, DBRS said.
The loans are a mix of fixed-and adjustable-rate and prime and non-prime, that have a total principal balance of $390.2 million, DBRS said.
On average, the underlying mortgages have eight months of seasoning, with original ages ranging from six to 31 months. United Wholesale Mortgage the largest portion of loans, 32.5%, while all other originators each contributed less than 10% to the overall pool, DBRS said.
NewRez will service almost the entire pool, 97.5%, with Select Portfolio Servicing overseeing the rest, the rating agency said.
DBRS says the pool has several credit strengths, including the borrowers’ robust credit attributes. On a weighted average (WA) basis, the borrowers have a FICO score of 738, and they have an original, combined loan-to-value (CLTV) ratio of 70.0%, which suggests borrowers have accumulated a lot of equity in their homes, the rating agency said.
As of the August 1 cut-off date, 99.3% of the loans in the collateral pool are current, DBRS said.
Yet the pool has several credit weaknesses, DBRS said.
“Compared to post-crisis prime transactions, the portfolio contains mortgage loans to borrowers with weaker credit and prior derogatory credit events,” the analysts wrote.
DBRS assigns ratings of AAA to the A1 notes; AA to the 2 notes; A to the A3 notes; BBB to the class M1 notes; BB to the B1 notes and B to the B2 notes.
