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Full Appraisals, Income Verifications on Rocket Jr Lien Issuance

A second securitization from RCKT Mortgage Trust 2023-CES is expected later this month. All of the loans in the latest issuance are closed-end second mortgages originated by Rocket Mortgage LLC. The income was calculated based on full documentation as required by Fannie Mae, while full interior appraisals were obtained.

RCKT Mortgage Trust 2023-CES2 is being readied for issuance. The deal includes 4,054 closed-end seconds with an aggregate unpaid principal balance of $305.458 million, according to an analysis from KBRA, which rated 12 classes.

All of the loans in the transaction were originated and are serviced by Rocket.

It’s the second such transaction this year for the issuer, with RCKT 2023-CES1 having closed in June.

Each of the loans were underwritten with full interior appraisals, and no secondary valuations like automated valuation models or desk reviews were used.

On a weighted-average basis, the original combined loan-to-value ratio is 69.1%, and just over a fifth of the loans had a CLTV ratio in excess of 80% at origination. The debt-to-income ratio is 36.7%, the original term is 235 months,  and FICOs are 739. Owner-occupied transactions account for 99.4% of the total.

“Consistent with the originator’s underwriting guidelines, all of the borrowers provided income documentation in accordance with the underwriting guidelines of Fannie Mae,” the analysis stated. “In KBRA’s view, this level of income documentation is considered to be ‘full’ documentation that generally meets the income and debt documentation framework established by the [Ability to Repay/Qualified Mortgage] rule.”

KBRA noted that the weighted-average gross coupon on the securitization is 10.07%.

Loans secured by properties located in California accounted for 16.2% of the loans, and Florida was the location of just over 10%. No other state had a 10% or more concentration.

The RMBS is being co-sponsored by Woodward Capital Management LLC and FirstKey Mortgage,

RCKT 2023-CES2 is expected to close on September 19. It will be the 10th junior-lien transaction tracked by HELN so far this year.