Morningstar DBRS Assigns Provisional Credit Ratings to ATLX 2024-RPL2 Trust

DBRS, Inc. (Morningstar DBRS) assigned provisional credit ratings to the ATLX 2024-RPL2 Mortgage-Backed Notes, Series 2024-RPL2 (the Notes) to be issued by ATLX 2024-RPL2 Trust (ATLX 2024-RPL2 or the Trust) as follows:

-- $342.5 million Class A-1 at (P) AAA (sf)
-- $23.2 million Class A-2 at (P) AA (high) (sf)
-- $21.6 million Class M-1 at (P) A (high) (sf)
-- $16.8 million Class M-2 at (P) BBB (high) (sf)
-- $38.4 million Class M at (P) BBB (high) (sf)
-- $5.8 million Class B -1 at (P) BB (high) (sf)

The Class M Note is exchangeable. This class can be exchanged for combinations of initial exchangeable notes as specified in the offering documents.

The (P) AAA (sf) credit rating on the Notes reflects 25.55% of credit enhancement provided by subordinated notes. The (P) AA (high) (sf), (P) A (high) (sf), (P) BBB (high) (sf), and (P) BB (high) (sf) credit ratings reflect 20.50%, 15.80%, 12.15%, and 10.90% of credit enhancement, respectively.

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

This transaction is a of a portfolio of seasoned performing and reperforming first-lien residential mortgages funded by the issuance of the Notes. The Notes are backed by 3,170 loans with a total principal balance of $460,104,959 as of the Cut-Off Date (September 30, 2024).

The mortgage loans are approximately 214 months seasoned. As of the Cut-Off Date, 85.5% of the loans are current (including 0.6% bankruptcy-performing loans), 12.7% of the loans are 30 days delinquent (including 0.04% bankruptcy loans), and 1.8% of the loans are 60-plus days delinquent under the Mortgage Bankers Association (MBA) delinquency method. Under the MBA delinquency method, 56.9% and 66.2% of the mortgage loans have been zero times 30 days delinquent for the past 24 months and 12 months, respectively.

The portfolio contains 80.7% modified loans as determined by the Issuer. Morningstar DBRS considers the modifications happened more than two years ago for 98.1% of these loans. Within the pool, 1,218 mortgages have an aggregate noninterest-bearing deferred amount of $ 44,148,032, which comprises 9.6% of the total principal balance.

ATLX 2024-RPL2 represents the second rated securitization of seasoned performing and reperforming residential mortgage loans issued by the Sponsor, Resi IA SPE, LLC.

The Sponsor will contribute the loans to the Trust through Atlas Securitization Depositor LLC (the Depositor). As the Sponsor, Resi IA SPE or one of its majority-owned affiliates will acquire and retain a 5% eligible interest of the amounts collected on the mortgage loans to satisfy the credit risk retention requirements under Section 15G of the Securities Exchange Act of 1934 and the regulations promulgated thereunder.

The loans are being serviced by Select Portfolio Servicing, Inc., Nationstar Mortgage LLC doing business as (dba) Rushmore Loan Management Services LLC, and NewRez LLC dba Shellpoint Mortgage Servicing. There will not be any advancing of delinquent principal and interest (P&I) on any mortgages by the Servicers or any other party to the transaction; however, the Servicers is obligated to make advances in respect of homeowners association fees in super lien states and, in certain cases, taxes and insurance as well as reasonable costs and expenses incurred in the course of servicing and disposing of properties.

The Controlling Holder will have the option to direct the Servicers to sell any mortgage loan that becomes 90-plus days delinquent in a sale conducted at arm's length terms in a commercially reasonable manner to any person, other than the Servicers or an affiliate.

On any Payment Date on or after the date two years after the closing, the Controlling Holder will have the option to purchase all remaining loans and other assets of the Issuer at the Early Repayment Price. The Controlling Holder will be the beneficial owner of more than 50% the Class XS Notes.

The transaction employs a sequential-pay cash flow structure. Principal proceeds can be used to cover interest shortfalls on the Notes, but such shortfalls on Class A-2 and more subordinate P&I bonds will not be paid from principal proceeds until the more senior classes are retired.

The credit ratings reflect transactional strengths that include the following:
-- Loan-to-value ratios,
-- Satisfactory third-party due-diligence review,
-- Seasoning, and
-- Structural features.

The transaction also includes the following challenges:
-- Representations and warranties standard,
-- No servicer advances of delinquent P&I, and
-- Assignments, endorsements, and missing documents.

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

Morningstar DBRS' credit ratings on the Notes address the credit risk associated with the identified financial obligations in accordance with the relevant transaction documents. The associated financial obligations are the related current interest, any interest shortfall amount, and the related note amount.

Morningstar DBRS' credit ratings on the Notes also address the credit risk associated with the increased rate of interest applicable to the Class A-1, A-2, M-1, and M-2 Notes if the Controlling Holder does not exercise its Early Repayment Option (as defined in and) in accordance with the applicable transaction document(s).

Morningstar DBRS' credit rating does not address nonpayment risk associated with contractual payment obligations contemplated in the applicable transaction document(s) that are not financial obligations. For example, in this transaction, Morningstar DBRS' credit rating on the Class A-1, A-2, M-1, and M-2 Notes does not address the payment of any net weighted-average coupon shortfall based on its position in the cash flow waterfall.

Morningstar DBRS' long-term credit ratings provide opinions on risk of default. Morningstar DBRS considers risk of default to be the risk that an issuer will fail to satisfy the financial obligations in accordance with the terms under which a long-term obligation has been issued.

ENVIRONMENTAL, SOCIAL, AND GOVERNANCE CONSIDERATIONS
There were no Environmental/Social/Governance factor(s) that had a significant or relevant effect on the credit analysis.

A description of how Morningstar DBRS considers ESG factors within the Morningstar DBRS analytical framework can be found in the Morningstar DBRS Criteria: Approach to Environmental, Social, and Governance Factors in Credit Ratings (August 13, 2024), https://dbrs.morningstar.com/research/437781.

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

The principal methodology applicable to the credit ratings is RMBS Insight 1.3: U.S. Residential Mortgage-Backed Securities Model and Rating Methodology (September 30, 2024), https://dbrs.morningstar.com/research/440090.

Other methodologies referenced in this transaction are listed at the end of this press release.

The credit ratings were initiated at the request of the rated entity.

The rated entity or its related entities did participate in the credit rating process for these credit rating actions.

Morningstar DBRS had access to the accounts, management, and other relevant internal documents of the rated entity or its related entities in connection with these credit rating actions.

These are solicited credit ratings.

A provisional credit rating is not a final credit rating with respect to the above-mentioned securities and may change or be different than the final credit ratings assigned or may be discontinued. The assignment of the final credit ratings on the above-mentioned securities are subject to receipt by Morningstar DBRS of all data and/or information and final documentation that Morningstar DBRS deems necessary to finalize the credit ratings.

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

DBRS, Inc.
140 Broadway, 43rd Floor
New York, NY 10005 USA
Tel. +1 212 806-3277

The credit rating methodologies used in the analysis of this transaction can be found at: https://dbrs.morningstar.com/about/methodologies.

-- RMBS Insight 1.3: U.S. Residential Mortgage-Backed Securities Model and Rating Methodology (September 30, 2024),
https://dbrs.morningstar.com/research/440090
-- Interest Rate Stresses for U.S. Structured Finance Transactions (February 26, 2024),
https://dbrs.morningstar.com/research/428623
-- Third-Party Due-Diligence and Representations & Warranties Criteria for U.S. RMBS Transactions (September 30, 2024),
https://dbrs.morningstar.com/research/440091
-- Legal Criteria for U.S. Structured Finance (April 15, 2024),
https://dbrs.morningstar.com/research/431205
-- Operational Risk Assessment for U.S. RMBS Originators and Servicers (September 30, 2024),
https://dbrs.morningstar.com/research/440086

For more information on this credit or on this industry, visit https://dbrs.morningstar.com or contact us at info-DBRS@morningstar.com.