BRAVO Residential Funding Trust is kicking off 2026 with a $401.3 million deal to sell to investors, as non-qualified mortgages continue taking a significant share of residential mortgage-backed securities (RMBS) issuance.
The sale of the most recent note series, 2026-NQM1, is expected to close on January 22, according to Kroll Bond Rating Agency, adding the deal will issue about 11 tranches of notes, which will have a final maturity date of Dec. 25, 2065.
Notes are expected to pay coupons of 4.94% on notes in the A1FCF tranche, rated AAA from KBRA and Fitch Ratings, to 6.78% on the B1 notes, rated BB and BB+, from Fitch and KBRA, respectively, according to Asset Securitization Report's deal database.
Notes will repay investors through a combination of a pro-rata structure on the senior, class A notes, and sequentially on the mezzanine and subordinate notes, KBRA said. The notes to be sold to investors are fixed rate, except for the B2 and B3 subordinate notes.
Four of the five senior tranches benefit from credit enhancement levels equaling 24.80%, KBRA said, while the A1A tranche's credit enhancement level equals 34.80% of the note balance.
The collateral pool is composed of 779 loans, and most of them, 77.07%, will finance single-family homes and planned unit developments.
Arc Home and Citadel originated most of the loans in the pool, accounting for 46.2% and 36.5% of the pool, respectively. Rushmore and Citadel will service 55.2% and 26.5% of the pool, respectively, Fitch Ratings said.
On average the, loans in the pool have a balance of $515,220, with three months of seasoning. The loans have an original loan-to-value (LTV) ratio of 70.6%. Borrowers have an original debt-to-income ratio of 34.8%, and a FICO score of 744 according to Fitch Ratings.
Fitch assigns AAA to the four A1 tranches; and AA, A, BBB- BB, and B to tranches A2, A3, M1, B1 and B2, respectively.
KBRA assigns AAA to all the A1 tranches; AA+ to the A2 notes; A to the A3 tranche; BBB+ to the M1 tranche; BB+ to the B1 piece; and B+ to the B2 notes.
