Firm uses a non-QM tactic
Toorak Capital Partners, an investment company specializing in bridge lending, has announced a pending $224.3 million non-agency MBS collateralized by 30-year mortgages on investment properties.
The underlying collateral is made up of 1,092 rental property mortgages underwritten using debt service coverage ratios (DSCRs) – a tactic common among non-QM lenders. The 30-year fixed-rate mortgages (98.2% of the loan pool) have seasoned for an average of 12 months.
“Toorak’s loan purchases are informed by management’s observation that personal DTI levels are less predictive of default than the DSCR on investor loans, as the company believes that DTI does not have the same precision in determining whether a given property has positive cash flow,” KBRA said in its report.
The move expands Toorak’s MBS issuance beyond bridge loans. The company has been securitizing fix-and-flip loans for residential properties, according to Inside Mortgage Finance.
RCN Capital will lead the deal with a 22.8% share, while BSI Financial Services will handle the servicing. Kroll Bond Rating Agency assigned preliminary AAA ratings on the MBS.