DBRS Morningstar Assigns Provisional Rating to Visio 2019-2 Trust

DBRS, Inc. (DBRS Morningstar) assigned a provisional rating to the following Mortgage-Backed Note, Series 2019-2 (together with the unrated classes in the transaction, the Notes) to be issued by Visio 2019-2 Trust (Visio 2019-2 or the Issuer):

-- $133.4 million Class A-1 at AAA (sf)

The AAA (sf) rating on Class A-1 reflects 34.15% of credit enhancement provided by subordinated Notes in the pool.

Other than the specified classes above, DBRS Morningstar does not rate any other classes in this transaction.

The transaction is a securitization of a portfolio of fixed- and adjustable-rate, expanded prime and non-prime first-lien residential mortgages funded by the issuance of the Notes. This transaction marks the fifth securitization from Residential Credit Opportunities II, LLC (the Sponsor) backed entirely by loans originated to investors under debt service coverage ratio (DSCR) programs. The Notes are backed by 1,188 mortgage loans with a total principal balance of $202,652,789 as of the Cut-Off Date (September 30, 2019).

Of the 1,188 mortgage loans in the transaction, 281 loans, representing 13.7% of the aggregate pool balance, were previously securitized by the Sponsor. On the Closing Date, the Sponsor will effectuate an optional redemption of the securitization and direct the trustee, Wilmington Savings Fund Society, FSB, to assign certain performing loans to Visio 2019-2 Depositor LLC to be sold to the Issuer.

Visio Financial Services Inc. is the sole originator for the mortgage pool. The servicer of the loans is Servis One, Inc. doing business as BSI Financial Services.

The mortgage loans were underwritten to program guidelines for business-purpose loans that are designed to rely on property value, the mortgagor’s credit profile and the DSCR, where applicable. Since the loans were made to investors for business purposes, they are exempt from the Consumer Financial Protection Bureau’s Ability-to-Repay rules and TILA/RESPA Integrated Disclosure rule.

The Sponsor, directly or indirectly through a majority-owned affiliate, will retain an eligible horizontal residual interest consisting of the Class B-2, Class B-3 and Class XS Notes, representing at least 5% of the Notes, to satisfy the credit risk-retention requirements under Section 15G of the Securities Exchange Act of 1934 and the regulations promulgated thereunder and risk retention requirement in the European Union Securitization Regulation.

The ratings reflect transactional strengths that include the following:

-- Improved underwriting standards,
-- Robust loan attributes and pool composition and
-- Satisfactory third-party due diligence review.

The transaction also includes the following challenges:

-- Investor loans,
-- Representations and warranties framework and
-- No servicer advances of delinquent principal and interest.

The full description of the strengths, challenges and mitigating factors is detailed in the related presale report.

Notes:
All figures are in U.S. dollars unless otherwise noted.

The principal methodology is RMBS Insight 1.3: U.S. Residential Mortgage-Backed Securities Model and Rating Methodology, which can be found on dbrs.com under Methodologies & Criteria.

The rated entity or its related entities did participate in the rating process for this rating action. DBRS Morningstar had access to the accounts and other relevant internal documents of the rated entity or its related entities in connection with this rating action.

Please see the related appendix for additional information regarding the sensitivity of assumptions used in the rating process.

The full report providing additional analytical detail is available by clicking on the link under Related Documents below or by contacting us at info@dbrs.com.

For more information on this credit or on this industry, visit www.dbrs.com or contact us at info@dbrs.com.

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