Non-qualified mortgages will secure the latest J.P. Morgan mortgage issuance, as the J.P. Morgan Mortgage Trust 2025-NQM5 comes to market with $587.6 million in residential mortgage-backed securities.

According to Fitch Ratings and Morningstar DBRS, which assessed the deal, the collateral pool is secured by a pool of all first lien mortgages diversified by fixed and adjustable-rates, prime- and non-prime.

JPMMT-NQM5 will issue the notes through about 11 tranches of class A, M and B notes, with the class A notes containing the bulk of the notes, the rating agencies said. All the notes have a May 2066 final distribution date.

With J.P. Morgan Securities as lead underwriter, the deal is expected to close on December 30., will repay investors through a modified-sequential structure, with the class A notes being repaid on a pro rata basis, Fitch and DBRS said, although there are limits to the advancing of delinquent principal and interest.

A significant portion of the loans in the pool by balance, 44.5%, are designated at non-QM, according to DBRS, adding that about 50% of the loans in the pool were made to investors for business purposes. Only 19.6% of the loans in the collateral pool were underwritten using full documentation, according to Fitch.

The underlying loans, however, generally have good credit, with about 72.7% of borrowers having credit scores of 720 and higher. On a weighted average (WA) basis, the underlying loans have a combined loan-to-value (CLTV) ratio of 74.0%, suggesting that borrowers have significant equity in their homes, DBRS said.

Some 1,611 loans will secure the certificates issued to investors, as of the deal's December 1, cutoff date. DBRS notes that they benefit from improved underwriting standards. For instance, for borrowers using bank statements as income verification, one borrower must be self-employed, and income must be supported by 12 or 24 months of personal or business bank statements, the rating agency said.

Maxex Clearing and United Wholesale Mortgage are the top originators in the pool, while Shellpoint Mortgage and Selene Finance as servicer, Fitch said.

Fitch assigns AAA to all the A1A notes; AA- to the A2 notes; A- to the A3 notes and BBB- to the M1A notes.

DBRS assigns (P) AAA (sf) to the A1 notes, it says. After that, DBRS' ratings range from (P) AA (high) (sf) on the A2 notes to (P) B (low) (sf) on the B2 notes.