Oceanview Belief floats $351 million in jumbo mortgages
As the US economy gradually enters pandemic lockdown mode, several aspects of home loan borrowers are also returning to pre-COVID-19 levels, including self-employed borrower levels in Oceanview Mortgage Trust 2021-3 or OCMT 2021-3, the expected to issue $ 351 million in debt securities.
Self-employed borrowers made up 18.7% of the borrowers in the pool that secured the deal. For 2020 and 2021, the average combined percentage of self-employed borrowers was 19.5%, according to the Kroll Bond rating agency.
The self-employed had slightly weaker credit fundamentals, according to KBRA, as they were more affected by the pandemic due to business closings. For example, the original FICO for self-employed was 773 while full-time employees had a FICO of 779. The original self-employed combined loan-to-value ratio (CLTV) for the underlying loans was 61.6%. , compared to 69.3% for full-time employees.
In total pool and weighted average, OCMT 2021-3 borrowers had significant, documented liquidity reserves of $ 553,483 for high quality jumbo loans. Compared to recent transactions, borrowers have also been shown to have high residual income.
All of the loans in the pool were qualified mortgages, which KBRA considers credit positive.
Consistent with the fact that jumbo mortgages are often made at high home prices, the pool is heavily invested in California assets. This state accounted for 22.6% of the pool balance while Virginia, Texas, Florida and Maryland account for 10.3%, 9.8%, 7.2% and 4.7%, respectively.
Another aspect of jumbo loans is that the customers are often high net worth borrowers. While the underwriting terms of such loans are conservative, they pose a risk to RMBS pools of jumbo loans as a single loan can constitute a significant portion of the pool balance.
From a different perspective, the top five core-based statistical areas (CBSA) were Washington, DC (11%); Los Angeles (6.5%); San Francisco (5.4%), Dallas, Texas (4.0%) and Philadelphia (3.4%).