Mill City Holdings’ next offering of reperforming mortgage bonds contains a lower portion of home equity lines of credit than any of the three deals it completed last year.
The $381 million Mill City Mortgage Loan Trust 2018-1 is a securitization of 2,242 loans, many of which were once delinquent but are now making timely payments, according to rating agency presale reports.
The loans are approximately 125 months seasoned. Approximately 50.9% of the pool has made timely payments for the past 24 months, 70.8% has been current for the past 12 months and 90.4% has current for the past six months.
Approximately 2.9% of the pool is comprised of first-lien HELOCs. Of these, 81.8% are temporarily frozen and currently ineligible for draws. However, these borrowers may regain access to their credit limits in the event the circumstances that caused the frozen line are cured. (Mill City will fund a HELOC Draw Reserve Account to purchase future draws from the related servicer.)
Certain HELOCs (18.2%) are permanently frozen and are no longer permitted for draws. The weighted average utilization rate for all the HELOCs is 98.3%.
By comparison, HELOC concentrations in the three deals completed last year ranged from 6.2% to 16.5%.
The overall pool consists 66.6% of fixed-rate mortgages, 19.5% of fixed step-rate mortgages and 13.9% of hybrid adjustable-rate mortgages. Approximately 2.7% of the loans have active IO features.
Shellpoint Mortgage Servicing, Fay Servicing ad Select Portfolio Servicing are the servicers.
DBRS expects to assign an AAA rating to the senior tranche of notes, which benefits from 36.2% credit enhancement. That’s slightly higher than the 35.75% credit enhancement on the comparable tranche of notes issued in the prior deal.