Fitch rates first subprime securitization since crisis

by Ryan Smith22 Jun 2016
A private equity firm has purchased the first agency-rated subprime mortgage securitization since the financial crisis, according to the Financial Times.

Caliber Home Loans originated the $161.7 million worth of loans, which were purchased by Lone Star. Fitch and DBRS graded the loans.

Fitch said that the deal, as the first subprime securitization since the financial meltdown to be agency-rated, is a “trailblazer.” The agency rating, Fitch said, gave investors more certainty about the amount of risk on the securitization. The agency said it was “very possible” that investors will see similar deals later this year.

According to Fitch, half of the transactions are backed with mortgages under the Ability to Repay rule, and 41% are under qualified mortgage terms. The remainder include safe harbor provisions to protect lenders.

The bottom tranche of the subprime bond is unrated, while the other is rated BB, according to mortgagestrategy.com.
 

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