A&D Mortgage, together with its Imperial Fund Mortgage Trust, recently received significant rating increases from S&P Global Ratings for three of its six securitization transactions issued in 2020 – a rare feat.
S&P upgraded Imperial Fund Mortgage Trust Series 2020-NQM1 as follows:
- Class A2: From AA to AA+
- Class A3: From A to AA-
- Class M1: From BBB to BBB+
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Get StartedAccording to S&P Global, the upgrades primarily indicate deleveraging because the related transactions reflect the following benefits:
- low or zero accumulated losses to date
- high prepayment speeds to date
- increasing percentage of credit support to the rated classes
In addition, delinquency levels have been generally declining, partly due to borrowers exiting COVID-19-related forbearance plans via deferrals and/or loan modifications, or upon the completion of repayment plans.
As a consequence, A&D has one of the lowest default rates in the securitization industry.
The upgrades initiated by S&P are highly unusual actions, as Credit Ratings Agencies (CRAs) do not generally upgrade deals only one or two years after closing. It is a reflection of how well A&D’s securitization transactions are performing in the market.
Non-QM Market Leader
As one of the few companies that issue Non-QM securities (through its Imperial Fund), the securitization market has been instrumental in expanding A&D Mortgage’s ability to conduct transactions on a repeat basis within the mortgage industry.
With the backing of securitization, A&D has become a market leader in setting the stage and tone for the Non-QM market and the development of Non-QM products. The S&P Global upgrades confirm the success of its approach.
As a result of the rating improvements, A&D is better positioned as the market driver in the Non-QM arena. The company can create its own products, which provide homebuying opportunities across the credit spectrum nationwide.
It further allows A&D to provide the best pricing and products for its broker partners while ensuring that the company remains financially strong.
Imperial Fund Mortgage Trust
Founded in 2014 and headquartered in Hollywood, Florida, Imperial is a mortgage investment fund. Imperial operates as an open-ended asset-management company and acquires investment portfolios, mainly consisting of Non-QM and bridge loans, real estate debt securities, mortgage loans, and related instruments.
Imperial’s team brings more than 55 years of combined experience in residential and commercial mortgage origination, asset and risk management, finance, capital markets, and structured finance.
The company seeks to achieve attractive risk-adjusted returns by exploiting inefficiencies in these markets.
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Get StartedImperial recently completed its ninth securitization, backed by a pool of residential loans, and expects to begin marketing its 10th transaction in late July.
In its most recent transaction, Imperial Fund successfully completed a securitization valued at $392.1 million. The underlying collateral consisted of 909 residential mortgages, with a concentration of alternative income documentation or Non-QM loans (94.7%).
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