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KBRA Assigns Ratings to Verus Securitization Trust 2020-INV1 (Verus 2020-INV1)

Kroll Bond Rating Agency (KBRA) assigns ratings to two classes of mortgage certificates from Verus Securitization Trust 2020-INV1 (Verus 2020-INV1), a $295.3 million residential mortgage-backed securities (RMBS) transaction collateralized by investment-purpose mortgages exempt from Ability-to-Repay (ATR) rules.

Verus 2020-INV1 is the seventh forward-mortgage RMBS 2.0 transaction issued by the sponsor, Verus Mortgage Capital Asset Pooler, and 18th combined transaction under common control with Invictus Residential Pooler. The $295.3 million transaction is collateralized by investment-purpose mortgages that were predominantly underwritten under the Property Focused Investor Loan program, using property loan-to-value (LTV) and borrower credit scores. When available, debt service coverage ratio (DSCR) was used instead of the borrower’s debt-to-income ratio (DTI) under the Property Focused Investor DSCR Loan program. Since all of the loans are considered to be made for business purposes, they are considered exempt from consumer-purpose regulations such as ATR/QM and TILA-RESPA integrated disclosures (TRID).

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.

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Disclosures
Further information on key credit considerations, sensitivity analyses that consider what factors can affect these credit ratings and how they could lead to an upgrade or a downgrade, and ESG factors (where they are a key driver behind the change to the credit rating or rating outlook) can be found in the full rating report referenced above.

A description of all substantially material sources that were used to prepare the credit rating and information on the methodology(ies) (inclusive of any material models and sensitivity analyses of the relevant key rating assumptions, as applicable) used in determining the credit rating is available in the U.S. Information Disclosure Form located here.

Information on the meaning of each rating category can be located here.

Further disclosures relating to this rating action are available in the U.S. Information Disclosure Form referenced above. Additional information regarding KBRA policies, methodologies, rating scales and disclosures are available at www.kbra.com.

About KBRA
KBRA is a full-service credit rating agency registered as an NRSRO with the U.S. Securities and Exchange Commission. In addition, KBRA is designated as a designated rating organization by the Ontario Securities Commission for issuers of asset-backed securities to file a short form prospectus or shelf prospectus. KBRA is also recognized by the National Association of Insurance Commissioners as a Credit Rating Provider and is a certified Credit Rating Agency (CRA) with the European Securities and Markets Authority (ESMA). Kroll Bond Rating Agency Europe Limited is registered with ESMA as a CRA.

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Contacts

Analytical Contacts
Armine Karajyan, Associate Director (Lead Analyst)
+1 (646) 731-1210
akarajyan@kbra.com

Fei Han, Associate
+1 (646) 731-2342
fhan@kbra.com

Jack Kahan, Senior Managing Director (Rating Committee Chair)
+1 (646) 731-2486
jkahan@kbra.com

Business Development Contact
Michele Patterson, Managing Director
+1 (646) 731-2397
mpatterson@kbra.com