KBRA assigns preliminary ratings to 49 classes of mortgage-backed notes from Towd Point HE Trust 2023-1 (TPHT 2023-1), a $279.1 million RMBS transaction sponsored by FirstKey Mortgage, LLC (FirstKey). The collateral totaled $284.4 million as of December 31, 2022 (the Statistical Calculation Date) and consisted of closed-end second lien mortgages (CES; 69.1%), second lien home equity lines of credit (HELOCs; 30.3%), and first lien HELOCs (0.5%). The underlying pool is seasoned three months and comprises 3,394 loans originated by Spring EQ, LLC (Spring EQ; 53.4%) and Rocket Mortgage, LLC (Rocket; 46.6%). The CES collateral (69.1% of pool – 46.6% originated by Rocket; 22.5% originated by Spring EQ) is characterized by fully amortizing, fixed-rate mortgages (FRMs), while the HELOC portion (30.9% of pool – all originated by Spring EQ) consists of adjustable-rate mortgages (ARMs) with 10-year interest-only (IO) terms. The HELOCs also feature a 20-year repayment period after a 10-year initial draw window, with borrowers having drawn $87.9 million from the combined credit limit of $98.1 million (an 89.6% current draw percentage, also referred to as the utilization rate).

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Related Publications

• TPHT 2023-1 Tear Sheet
• RMBS KBRA Comparative Analytic Tool (KCAT)
• U.S. RMBS Mortgage Default and Loss Model Methodology
• U.S. RMBS Rating Methodology
• Global Structured Finance Counterparty Methodology

Disclosures

Further information on key credit considerations, sensitivity analyses that consider what factors can affect these credit ratings and how they could lead to an upgrade or a downgrade, and ESG factors (where they are a key driver behind the change to the credit rating or rating outlook) can be found in the full rating report referenced above.

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Information on the meaning of each rating category can be located here.

Further disclosures relating to this rating action are available in the Information Disclosure Form(s) referenced above. Additional information regarding KBRA policies, methodologies, rating scales and disclosures are available at www.kbra.com.

About KBRA

Kroll Bond Rating Agency, LLC (KBRA) is a full-service credit rating agency registered with the U.S. Securities and Exchange Commission as an NRSRO. Kroll Bond Rating Agency Europe Limited is registered as a CRA with the European Securities and Markets Authority. Kroll Bond Rating Agency UK Limited is registered as a CRA with the UK Financial Conduct Authority pursuant to the Temporary Registration Regime. In addition, KBRA is designated as a designated rating organization by the Ontario Securities Commission for issuers of asset-backed securities to file a short form prospectus or shelf prospectus. KBRA is also recognized by the National Association of Insurance Commissioners as a Credit Rating Provider.

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