Ad Mortgage Launches Its Largest Non-qm Securitization Yet

AD Mortgage, a provider of non-QM and residential mortgage-backed securities (RMBS), announced on Friday the successful launch of a $602.7 securitization deal, its largest to date.

The transaction, which follows the company’s first deal of the year, a $567.42 million transaction, marks AD’s 30th securitization of AD-originated collateral and the 21st to receive ratings from Fitch Ratings. In December, the company also launched a $417.15 million RMBS pool backed by 1,163 loans.

Victor Kutnetsov, asset manager at Imperial Fund Asset Management, said the deal represents a “defining milestone” for the firm. “It reflects not only the continued strength of the non-QM RMBS market, but also the confidence investors place in our platform and in AD non-QM mortgages as a premier asset class,” he said.

The pool includes 1,793 mortgages with an average seasoning of four months. Nearly all loans (99.9%) have fixed rates and 4.6% feature an initial interest-only period.

Borrowers in the pool have an average credit score of 748 and a weighted average combined loan-to-value ratio of 68.6%, a company press release stated.

The securitization includes loans generally considered nonprime due to borrower credit history or alternative income documentation. About 84% of the loans were underwritten using alternative documentation, including bank statements, debt-service-coverage ratios and profit-and-loss statements.

Approximately 4.8% are second-lien loans, and 22% are categorized as non-QM.

AD Mortgage originated 91% of the loans, which are fully serviced by AD Mortgage LLC.

Initial purchasers for the transaction included J.P. Morgan Securities, Apollo’s ATLAS SP Securities, Barclays Capital, Mizuho Securities, Morgan Stanley, Nomura Securities, Academy Securities, AmeriVet Securities, Natixis Securities and Piper Sandler.