Chimera Investment Corporation Supports Residential Mortgage Loan Securitizations
Chimera Investment Corporation (NYSE: CIM) announced that on March 25, 2025, it had successfully sponsored two securitizations of residential mortgage loans, collectively amounting to an aggregate principal balance of $646 million. These securitizations mark a continuation of Chimera’s efforts to optimize its mortgage-backed securities portfolio and generate liquidity. The mortgage loans for both transactions were sourced from the redemption of prior Chimera-sponsored securitizations, including CIM 2021-NR1, CIM 2021-NR2, CIM 2021-NR3, CIM 2021-NR4, CIM 2022-NR1, CIM 2023-NR1, and CIM 2023-NR2. The net proceeds received from these transactions exceeded $187 million, reinforcing Chimera’s strategic position in the mortgage market.
Details of CIM 2025-R1 Securitization
Chimera sponsored CIM 2025-R1, a $391.8 million securitization of residential mortgage loans. The loans included in this securitization had a weighted average coupon of 5.74%, a weighted average FICO score of 636, and a loan-to-value (LTV) ratio of 50.80%.
Securities issued by CIM 2025-R1, with an aggregate balance of approximately $333 million, were sold in a private placement to institutional investors. These senior securities accounted for approximately 85% of the overall capital structure. Chimera retained subordinate interests in securities with an aggregate balance of approximately $58.8 million, along with certain interest-only securities.
Chimera also retained an option to call the securitized mortgage loans on the earlier of:
- March 25, 2027, or
- When the aggregate note amount of the offered notes falls below 10% of the original aggregate note amount as of March 25, 2025.
The weighted average cost of debt on the securities sold was 5.74%. Palisades Advisory Services, a wholly owned subsidiary of Chimera Investment Corporation, will serve as the Asset Manager for this securitization.
Details of CIM 2025-NR1 Securitization
In addition to CIM 2025-R1, Chimera sponsored CIM 2025-NR1, a $254.4 million securitization of residential mortgage loans. The underlying loans in this securitization had a weighted average coupon of 5.67%, a weighted average FICO score of 597, and an LTV ratio of 61.61%.
Securities issued by CIM 2025-NR1, with an aggregate balance of approximately $184.5 million, were sold through a private placement to institutional investors. These Chimera Investment senior securities made up approximately 72.50% of the overall capital structure. Chimera retained subordinate interests in securities with an aggregate balance of approximately $70.0 million.
Additionally, Chimera retained an option to call the securitized mortgage loans at the direction of the majority class B1 certificateholder, beginning on March 25, 2026. The weighted average cost of debt on the securities sold was 6.59%.
As with CIM 2025-R1, Palisades Advisory Services will act as the Asset Manager for CIM 2025-NR1.
Strategic Significance of the Transactions
These securitizations represent Chimera’s continued commitment to managing its portfolio efficiently while maintaining flexibility in its capital structure. By redeeming prior securitizations and restructuring the mortgage loans into new deals, Chimera effectively recycles its capital, improves liquidity, and enhances the overall credit quality of its investments.
The ability to successfully execute these transactions underscores Chimera’s expertise in the mortgage-backed securities market. The company remains focused on maintaining a balanced portfolio, optimizing risk-adjusted returns, and ensuring prudent risk management practices.
Furthermore, Chimera’s approach to retaining subordinate interests in these deals allows it to maintain exposure to potential upside while mitigating risk by structuring transactions that appeal to institutional investors. The call options embedded in the deals provide Chimera with additional flexibility to manage these securitizations efficiently in response to market conditions.
Market Outlook and Future Plans
With the ongoing evolution of the residential mortgage market, Chimera remains well-positioned to capitalize on emerging opportunities. The company continues to evaluate and execute securitization transactions that align with its strategic objectives, particularly in response to interest rate movements and investor demand for structured mortgage-backed securities.
As the financial landscape adapts to regulatory changes and economic shifts, Chimera’s focus on disciplined asset management and innovative securitization strategies will remain a cornerstone of its business model. The recent transactions reaffirm Chimera’s ability to navigate complex market environments while delivering value to its shareholders and institutional investors.
Chimera Investment Corporation anticipates further securitization opportunities and intends to leverage its expertise to maximize portfolio performance. By actively Chimera Investment managing its securitized assets and maintaining a robust capital structure, Chimera aims to sustain long-term growth and profitability.
Chimera Investment Corporation’s successful sponsorship of CIM 2025-R1 and CIM 2025-NR1 highlights its strategic focus on optimizing mortgage-backed investments while ensuring financial stability. These securitizations, totaling $646 million in principal balance, reflect Chimera’s commitment to delivering superior investment solutions and maintaining a competitive edge in the residential mortgage market.
With a forward-looking approach and a strong track record in securitization, Chimera continues to strengthen its position in the industry, providing Chimera Investment institutional investors with attractive opportunities and reinforcing its role as a key player in mortgage-backed securities.
