TEXT-Fitch rates Residential Mortgage Securities 26 plc
Sept 6 – Link to Fitch Ratings’ Report: Residential Mortgage Securities 26 PlcSept 6 – Fitch Ratings has assigned Residential Mortgage Securities 26 plc’s RMBS notes expected ratings, as follows:
GBP150,000,000 Class A: ‘AAAsf(EXP)’, Outlook Stable GBP24,000,000 Class M1 : ‘AAsf(EXP)’, Outlook Stable GBP14,000,000 Class M2: ‘Asf(EXP)’, Outlook Stable GBP8,000,000 Class B1: ‘BBBsf(EXP)’, Outlook Stable GBP4,000,000 Class B2: ‘BBsf(EXP)’, Outlook Stable
The final ratings are subject to the receipt of final documents conforming to information already received.
The notes are backed by seasoned non-prime mortgages originated pre-2008 by Kensington Mortgages Company Limited (KMC: 61%), Money Partners Limited (7.5%) and GMAC-RFC (31.5%).
The expected ratings are based on the quality of the underlying collateral, available credit enhancement (CE), the servicing capabilities of Homeloan Management Limited (HML), and the financial and legal structure.
CE for the class A1 note totals 28.5% provided by the subordination of the class M1, M2, B1 and B2 notes (25.0%), a non-amortising reserve fund (3.5%), fully funded at closing (rising to 5% after closing), and excess spread. The class A1 notes will receive interest and principal payments. The M1, M2, B1, and B2 notes do not pay interest and the expected ratings opine on the issuer’s ability to repay principal by the transaction’s legal final maturity..
Fitch was provided with a loan-by-loan data template and all relevant fields were provided in the data tape with the exception of prior mortgage arrears and builder deposits. No adjustment was applied for the absence of data on prior mortgage arrears as data was provided for CCJs and prior bankruptcies/Individual Voluntary Arrangements. KMC was able to provide the year of construction for properties in the portfolio. Fitch assumed that any properties built within two years of the date of origination of the loan benefited from a builders deposit and applied a 5% downward adjustment to their valuations….read more