Atlas A&D Opportunity Fund III is sponsoring the deal, while A&D Mortgage originated the mortgage assets and is on the deal as servicer, according to ratings analysts at Kroll Bond Rating Agency. The transaction, A&D Mortgage Trust 2024-NQM5, is slated to close at the end of the month, and will issue the notes through 13 tranches of notes, including classes A, M and B.

ADMT 2024-NQM5 will repay the class A senior notes on a pro-rata basis, and all the senior notes are exchangeable, according to KBRA. The mezzanine and subsequent class B notes will repay investors sequentially, according to the capital structure.

Credit enhancement ranges from 51.7% on the class A1A notes to the 2.25% on the class B2 notes.

Mizuho Securities is the deal's structuring lead, KBRA said, while a group of about seven banks, including Mizuho Securities, ATLAS SP Securities, Barclays Capital and BNP Paribas, are on as initial purchasers.

Aside from the payment priority, the deal includes excess spread as credit enhancement, KBRA said.

Generally the pool is comprised of fixed-rate (99.5%), first-lien (95.1%) loans and the assets were underwritten using alternative documentation, about 90.5%. Those methods break down to include bank statements (38.6%), debt service coverage ratios (34.0%) and P&L statements (7.1%), according to KBRA.

While A&D will service the loans without a subservicer, it does not have the same breadth of staffing or systems that many large, third-party servicers do in the RMBS space. But Nationstar Mortgage is on the deal as master servicer, KBRA said.

Among the deal's credit strengths is that the collateral has just modest leverage, A&D as an experienced non-QM issuer and originator and full-scope third party due diligence reviews from two firms, the rating agency said.

KBRA assigns AAA to the A1 classes; AA+ to the A2 tranche; A+ to the A3 tranche; and BBB+ to the M1 notes; BBB- to the class B-1A; BB+ to the B-1B an B+ to the B2 notes.