DBRS Assigns Rating to Mortgage Fund IVc Trust 2016-RN5

DBRS, Inc. (DBRS) has assigned a rating to the following Asset-Backed Securities, Series 2016-RN5 (the Notes) issued by Mortgage Fund IVc Trust 2016-RN5 (the Trust):

-- $20.0 million Class A1 at A (sf)

The A (sf) rating on the Notes reflects 95.01% of credit enhancement provided by subordinated notes and overcollateralization.

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

This transaction is a securitization of seasoned re-performing residential loans (RPLs), non-performing residential loans (NPLs) and real estate-owned (REO) properties. The portfolio mostly contains either seasoned NPLs or loans that were previously non-performing, but have subsequently had periods of mortgage payments. For the purpose of this securitization, a loan is defined as performing if it is less than 60 days delinquent at the Cut-Off Date under the Mortgage Bankers Association method.

The RPLs, NPLs and REO properties constitute 64.0%, 30.9% and 5.1% of the pool, respectively. For the RPLs, approximately 91.6% of the loans were current as of the Cut-Off Date, including 67 bankruptcy-performing loans. Additionally, 31.6% of the RPLs have been current for at least 12 months and 13.3% of the loans have been current for at least 24 months. 1,536 RPLs have non-interest-bearing deferred amounts, which equates to 2.8% of the total principal balance as of the Cut-Off Date.

The loans are approximately 115 months seasoned.

The mortgage assets in this transaction were originated by various originators. Approximately 73% of the mortgage assets are currently serviced by Bayview Loan Servicing, LLC (BLS or the Servicer). The remaining mortgage assets were acquired from a third party and will be transferred to and serviced by BLS within 90 days of the closing date.

There will not be any advancing of delinquent principal or interest on any loans by the Servicer or any other party to the transaction; however, the Servicer is obligated to make advances in respect of taxes and insurance, reasonable costs and expenses incurred in the course of servicing and disposing of properties.

The transaction employs a sequential-pay cash flow structure. Principal proceeds can be used to cover interest shortfalls on the Notes.

DBRS notes the following strengths and challenges for this transaction:

Strengths:
-- Sufficient credit enhancement,
-- Experienced special servicer,
-- Strong structural features and
-- Third-party diligence reviews.

Challenges:
-- Relatively worse quality of collateral,
-- No servicer advances of delinquent principal and interest and
-- Document exception for certain loans.

These strengths, challenges and their mitigating factors are discussed in more detail in the related rating report.

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

The applicable methodologies are RMBS Insight 1.2: U.S. Residential Mortgage-Backed Securities Model and Rating Methodology, Operational Risk Assessment for U.S. RMBS Originators, Operational Risk Assessment for U.S. RMBS Servicers, Third-Party Due Diligence Criteria for U.S. RMBS Transactions, Representations and Warranties Criteria for U.S. RMBS Transactions and Legal Criteria for U.S. Structured Finance, which can be found on our website under Methodologies.

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

The full report providing additional analytical detail is available by clicking on the link to the right under Related Research 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.