Business Context and Reporting Period
This Form 8-K was filed by New York Mortgage Trust, Inc. (NYMT) on April 19, 2016, reporting events occurring on April 15, 2016. The filing details the completion of a securitization transaction by NYMT Residential 2016-RP1, LLC, a wholly-owned subsidiary of NYMT.
Key Financial Metrics
- Securitization Volume: Issued $177.5 million in Class A Notes and $25.5 million in Class M Notes.
- Underlying Asset Pool: Performing and re-performing seasoned mortgage loans with an aggregate unpaid principal balance of approximately $282.8 million.
- Gross Proceeds: Approximately $167.7 million received by NYMT through the Issuer.
- Interest Rate: Stated rate of 4.00% for the Notes.
- Retention: NYMT holds 5% of Class A Notes; NYMT Loan Financing, LLC retains all Class M Notes and 100% of the Issuer's membership certificate.
Material Changes and Transaction Details
The transaction represents a material definitive agreement and the creation of a direct financial obligation. NYMT securitized mortgage loans previously acquired in secondary market transactions. The Notes were issued pursuant to an indenture dated April 15, 2016, with U.S. Bank National Association as trustee. Interest and principal payments commence on April 25, 2016, funded by available funds from the loan pool, with a reserve account backing interest payments if necessary.
Outlook, Risks, and Contingencies
- Maturity Profile: Expected redemption date is March 25, 2019, with a stated final maturity date of March 25, 2021.
- Credit Event Risk: If Notes are not fully redeemed by the expected redemption date, a "Credit Event" occurs. This triggers an interest rate increase to 7.00% for the first year and 8.00% thereafter for Class A Notes (subject to available funds caps). Class M Notes become subordinate to Class A Notes following a Credit Event.
- Default Provisions: Events of default include failure to pay interest or principal, breach of covenants, or bankruptcy. Upon default, noteholders holding more than 66 2/3% of Class A Notes can declare the principal and accrued interest immediately due.
Investor Verification Checklist
- Verify the full text of the Indenture (Exhibit 4.1) for complete terms regarding the "Cap Carryover" and available funds caps.
- Confirm the composition and performance metrics of the $282.8 million mortgage loan pool.
- Monitor the reserve account balance to ensure sufficiency for interest payments if loan collections are insufficient.
- Assess the impact of the 5% Class A Note retention on NYMT's balance sheet and risk exposure.