DBRS Assigns Rating to Mortgage Fund IVc Trust 2017-RN4

DBRS, Inc. (DBRS) assigned the following rating to the Asset-Backed Securities, Series 2017-RN4 (the Notes) issued by Mortgage Fund IVc Trust 2017-RN4 (the Trust):

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

The A (sf) rating on the Notes reflects 96.06% 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 contains mostly 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 47.6%, 45.7% and 6.6% of the pool, respectively. Approximately 75.5% of the RPLs were current as of the Cut-Off Date, including 57 bankruptcy-performing loans. Additionally, 37.8% of the RPLs have been current for at least 12 months, and 30.4% of the loans have been current for at least 24 months. There are 1,406 RPLs with non-interest-bearing deferred amounts, which equates to 3.6% of the total principal balance as of the Cut-Off Date. Included in the deferred amounts of the RPLs are proprietary principal forgiveness and HAMP principal reduction alternative amounts (collectively, PRA amounts), which comprise 1.1% of the total principal balance. Approximately 42.3% of the RPLs are daily simple interest (DSI) loans.

The loans are approximately 118 months seasoned.

The mortgage assets in this transaction were originated by various originators. The mortgage loans were initially acquired by an affiliate of MF IVc Depositor, LLC (the Depositor) from various third-party sellers, many of whom may not have originated or modified the mortgage loans sold by them. As of the Cut-Off Date, all of the loans are serviced by Bayview Loan Servicing, LLC (BLS).

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,
-- Inclusion of daily simple interest loans,
-- 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.

The rating assigned to Class A1 was three or more notches lower than the rating implied by the quantitative model. DBRS considers this difference to be a material deviation. The rating reflects the quality of the collateral as well as the limited pay histories made available for the loans in the transaction.

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

The applicable methodologies are RMBS Insight 1.3: U.S. Residential Mortgage-Backed Securities Model and Rating Methodology, Assessing U.S. RMBS Pools Under the Ability-to-Repay Rules, 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.