The series 2024-SAT1 notes from FMC GMSR issuer trust are backed by certificates that represent participation interests in Ginnie Mae mortgage servicing rights. Interests include servicing income and the right to advance reimbursement.

The rating agency assigned a low-end investment grade designation of BBB- to the transaction, which has features that include the ability to transfer servicing if Freedom Mortgage were to default.

The rating is slightly lower than that received by a somewhat similar Pennymac transaction last month. KBRA assigned a BBB rating to Series 2024-GT1 notes from Pennymac's GMSR issuer trust.

Both Pennymac and Freedom are key players in the Ginnie Mae market. Ginnie Mae guarantees securitizations of home loans that other public entities like the Federal Housing Administration and Department of Veterans Affairs back.

Conditions have shifted recently in Ginnie servicing and it's been getting more market attention, Seth Sprague, director of consulting at Richey May, said in a recent webinar.

That's in part because when rates fell in the fourth quarter of last year, there was a notable pickup in prepayments for 6.5% coupons, generally reflecting activity in 7% mortgages.

"That is an opportunity or a threat. It depends on what side of the house you're on," he said. "If you own servicing and don't have the ability to recapture, this is a threat to you. If you have the ability to recapture it, this is an opportunity."