SAGE Residential’s latest sponsored securitization of closed-end second-lien residential mortgages will raise $463.8 million in bonds, selling the debt to investors through the SAIF Securitization Trust, series 2026-CES2.
Many elements of the 2026-CES2 series are similar to that of the previous deal, the 2026-CES1, including the number of loans, the outstanding pool balance, according to Morningstar DBRS. The average loan balance on the 2026-CES2, however, is $77,272, larger than the $71,768 on the 2026-CES1 series.
On a weighted average (WA) basis, the loans have a coupon of 8.98%, lower than the 9.24% on the 2026-CES1 notes, DBRS said. That coupon was also the lowest among the other comparison deals, going back to the SAIF 2024-CES1, the rating agency said. The current collateral has a FICO score of 729 on a WA basis, also higher than the levels seen on DBRS’ comparison deals.
SAIF 2026-CES2 will issue the notes through a series of five class A notes, a mezzanine class and three class B notes, which all have a final scheduled payment date of October 2056, according to the deal structure.
The A1 class is broken down into three AAA-rated tranches, made up of initial exchangeable notes that can be exchanged for the exchangeable notes. The most senior tranche, the A-1A notes, has a credit enhancement level of 25%, while the A-1B and A1 notes benefit from 20.60% in credit enhancement coverage, according to the rating agency.
Classes A2 and A3 have credit enhancement levels of 15.75% and 11.50%, respectively, DBRS said.
J.P. Morgan Securities and Nomura Securities are initial purchasers on the deal, which is expected to close on November 6.
Carrington Mortgage Services, Onity Mortgage originated 55.8% and 40.7%, respectively, of the 3,346 mortgages in the pool. The assets have a total principal balance of $258.5 million as of the September 30 cutoff date, according to DBRS.
Most of the loans in the pool, 53.7%, are designated as qualified mortgage, Safe Harbor, DBRS said. QM Rebuttable Presumption loans represent 15.7% and non-QM loans represent 30.6% of the pool, by unpaid balance, DBRS said.
Outside of the class A1 notes, the ratings ranged from (P) AA (low) (sf) on the class A2 notes through (P) B (low) (sf) on the class B2 notes.
