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TMCNet:  KBRA Assigns Preliminary Ratings to Flagstar Mortgage Trust 2018-3INV (FSMT 2018-3INV)

[May 15, 2018]

KBRA Assigns Preliminary Ratings to Flagstar Mortgage Trust 2018-3INV (FSMT 2018-3INV)

Kroll Bond Rating Agency (KBRA) assigns preliminary ratings to 22 classes of mortgage pass-through certificates from Flagstar Mortgage Trust 2018-3INV (FSMT 2018-3INV), the first prime RMBS transaction consisting entirely of agency-eligible, investment property loans, to KBRA's knowledge.

The FSMT 2018-3INV pool comprises 1,077 first-lien, prime residential mortgage loans with an aggregate principal balance of $329,047,681 as of the May 1, 2018 cut-off date. The collateral consists entirely of fully-amortizing, fixed rate mortgages (FRMs), most of which possess a 30-year (99.6%) maturity term. The pool is characterized by significant borrower equity in each mortgaged property, as evidenced by the WA original LTV of 65.5% and WA original CLTV of 65.6%. The weighted average original credit score is 769, which is well within the prime mortgage range.

Similar to the two previous FSMT transactions, FSMT 2018-3INV employed due diligence sampling on a portion of the underlying collateral, with full-scope due diligence (credit, compliance, valuation and data verification) on 20.0% of the pool, by loan count.

KBRA's rating approach incorporated loan-level analysis of the mortgage pool through its Residential Mortgage Default and Loss Model, an examination of the results from third-party loan file due diligence, cash flow modeling analysis of the transaction's payment structure, reviews of key transaction parties and an assessment of the transaction's legal structure and documentation. This analysis is further described in our U.S. RMBS Rating Methodology.

For complete details on the analysis, please see our pre-sale report, Flagstar Mortgage Trust 2018-3INV, which was published on May 15, 2018 on

Representations & Warranties Disclosure

All Nationally Recognized Statistical Rating Organizations are required, pursuant to SEC (News - Alert) Rule 17g-7, to provide a description of a transaction's representations, warranties and enforcement mechanisms that are available to investors when issuing credit rating. KBRA's disclosure for this transaction can be found in the report entitled, Flagstar Mortgage Trust 2018-3 Representations and Warranties Disclosure.

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About KBRA and KBRA Europe

KBRA is a full service credit rating agency registered with the U.S. Securities and Exchange Commission as an NRSRO. In addition, KBRA is recognized by the National Association of Insurance Commissioners as a Credit Rating Provider and a certified Credit Rating Agency (CRA) by the European Securities and Markets Authority (ESMA). Kroll Bond Rating Agency Europe Limited is registered with ESMA as a CRA.

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