Kroll Bond Rating Agency (KBRA) assigns preliminary ratings to eight classes of mortgage pass-through certificates from Verus Securitization Trust 2019-INV3 (VERUS 2019-INV3), a $533.5 million residential mortgage-backed securities (RMBS) transaction collateralized by investment-purpose mortgages exempt from Ability-to-Repay (ATR) rules.
VERUS 2019-INV3 is the 4th forward-mortgage RMBS 2.0 transaction issued by the Sponsor, Verus Mortgage Capital Asset Pooler, and 15th combined transaction under common control with Invictus Residential Pooler. The $533.5 million transaction is collateralized by investment-purpose mortgages that were predominantly underwritten under Property Focused Investor Loan program, using property LTV and borrower credit scores. When available, debt service coverage ratio (DSCR) was used instead of the borrowers DTI under Property Focused Investor DSCR Loan program. Since all of the loans are considered to be made for business-purpose, they are considered exempt from consumer-purpose regulations such as Ability-to-Repay/QM and TRID.
The underlying VERUS 2019-INV3 collateral are predominantly hybrid adjustable-rate mortgages (ARMs) (72.9%) with initial fixed-rate periods of five years (52.6%) and seven years (19.5%). Loans in the pool exhibit substantial borrower equity, as evidenced by the WA original LTV and CLTV of 66.0%. The pool has a WA original credit score of 727, and a WA loan age of 3 months.
KBRAs rating approach incorporated loan-level analysis of the mortgage pool through its Residential Mortgage Default and Loss Model, an examination of the results from third-party loan file due diligence, cash flow modeling, analysis of the transactions payment structure, reviews of key transaction parties and an assessment of the transactions legal structure and documentation. This analysis is further described in our U.S. RMBS Rating Methodology.
To access ratings, reports and disclosures, click here.
Related Publications: (available at www.kbra.com)
- VERUS 2019-INV3 Pre-Sale Report
- VERUS 2019-INV3 Tear Sheet
- RMBS KBRA Comparative Analytic Tool (KCAT)
- U.S. RMBS Rating Methodology
- Residential Mortgage Default and Loss Model
- U.S. RMBS Rating Methodology for Assessing Non-QM Risk
- Global Structured Finance Counterparty Methodology
- Credit Evolution “ Non-Prime Isnt Yesterdays Subprime
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KBRA is a full-service credit rating agency registered with the U.S. Securities and Exchange Commission as an NRSRO. In addition, KBRA is designated as a designated rating organization by the Ontario Securities Commission for issuers of asset-backed securities to file a short form prospectus or shelf prospectus. KBRA is also recognized by the National Association of Insurance Commissioners as a Credit Rating Provider, and is a certified Credit Rating Agency (CRA) by the European Securities and Markets Authority (ESMA). Kroll Bond Rating Agency Europe Limited is registered with ESMA as a CRA.
Armine Karajyan, Associate Director
Jack Kahan, Senior Managing Director
Fei Han, Analyst
Michele Patterson, Managing Director