Non-QM lender unlocks capital for expansion, lowers funding costs
Angel Oak Mortgage REIT, a real estate finance company specializing in non-QM loans, has priced its latest securitization deal (AOMT 2024-4), backed by approximately $300 million in residential mortgage loans.
The securitization covers 701 non-QM loans with a total principal balance of $299.8 million. These loans have a weighted average loan coupon of 7.4%, an original loan-to-value ratio of 69.8%, and a weighted average original FICO score of 748. The senior tranche of the securitization received a AAA rating from Fitch Ratings.
“AOMT 2024-4, our first standalone securitization of the year, is expected to drive meaningful earnings growth and yield expansion in both the near- and long-term while further improving the positioning of our portfolio to perform in changing rate environments,” said Sreeni Prabhu, chief executive officer and president of Angel Oak Mortgage REIT.
According to the company’s Press release, the transaction will reduce Angel Oak’s whole loan warehouse debt by $236 million, impacting its total recourse debt to equity ratio. While new loan purchases will increase this ratio, Angel Oak expects to maintain a ratio below 2.5x over the long term.
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“With this securitization, we will lock in over 100 basis points of savings on the funding costs of the loans underlying the deal,” Prabhu explained. “We intend to use the capital released by the securitization to continue to purchase additional high-quality current market coupon non-QM loans, compounding the positive impact to our net interest margin on a go-forward basis and positioning ourselves well for future accretive securitization transactions.”
The REIT will leverage its affiliated mortgage originators to acquire new loans with coupons in the 8% to 8.5% range.
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