ACRA assigns a credit rating to the first in Russia transaction of classic securitization of mortgage loans secured by electronic mortgage certificates

ACRA has assigned the expected credit rating at eAAA(ru.sf) to the senior tranche of mortgage-backed securities planned for issue by LLC "MA TB-1." Tinkoff Bank (A(RU), outlook Stable) will act as the Originator. The specific feature of the transaction is that all loans in the asset portfolio are secured by electronic mortgage certificates. Moreover, this is the first electronic mortgage certificates securitization transaction made without any budget funds or third-party guarantees for compensation of possible losses on the securitized portfolio.

Electronic mortgage certificates were introduced on July 1, 2018 by corresponding amendments to Federal Law No. 102-FZ "On mortgage (pledge of real property)." In the common practice of mortgage securitization transactions, a specialized mortgage pool depository usually verifies hardcopy mortgage certificates for correctness, eligibility and legal compliance before such certificates are included into the mortgage pool. In the case of electronic mortgage certificates, they are already verified when registered with the Federal Service for State Registration, Cadastre and Cartography.

The benefits of electronic mortgage certificates include:

  • Lower probability of errors in documents and stricter control over the compliance with requirements to mortgage pools;
  • Optimized time and costs of originator banks in issuing and securitizing mortgage loans;
  • Higher transparency and liquidity of the mortgage market.

"Servicing borrowers electronically (from issuing loans to registering real property) is one of the key purposes of the Housing and Urban Environment national project,” explains Cesar Horqque, Senior Director, Head of the Project and Structured Finance Ratings Group at ACRA. “This significantly reduces mortgage lenders' costs and, consequently, interest rates for borrowers, and also contributes to an increase in the number of issued mortgage-backed notes. The absence of hardcopy mortgage certificates in the Tinkoff Bank's transaction and the broad capabilities of the Originator, a leader in the financial technology segment, in optimizing and digitalizing the mortgage business are positive for both this transaction and the securitization market as a whole."

ACRA notes that the transaction was closed in the period of recession caused by the COVID-19 pandemic, amid logistical and operational constraints caused by self-isolation. In their estimations of expected losses on the rated notes, ACRA analysts took into account the impact of the macroeconomic downturn, as well as the government support measures to households, including loan repayment holidays.

Tinkoff Bank is among top 20 Russian banks in equity. The bank is focused on consumer lending, mostly through credit cards, and offers a wide range of financial services via its own online platform.

ACRA is the first and sole Russian rating agency that assigned ratings to mortgage-backed securities.

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