OREANDA-NEWS. Fitch Ratings expects to rate Agate Bay Mortgage Trust 2015-7 as follows:

--\\$216,167,000 class A-6 certificates 'AAAsf'; Outlook Stable;
--\\$72,056,000 class A-8 certificates 'AAAsf'; Outlook Stable;
--\\$23,266,000 class A-10 certificates 'AAAsf'; Outlook Stable;
--\\$311,489,000 class A-X-1 notional certificates 'AAAsf'; Outlook Stable;
--\\$216,167,000class A-X-4 notional certificates 'AAAsf'; Outlook Stable;
--\\$72,056,000 class A-X-5 notional certificates 'AAAsf'; Outlook Stable;
--\\$23,266,000 class A-X-6 notional certificates 'AAAsf'; Outlook Stable;
--\\$8,537,000 class B-1 certificates 'AAsf'; Outlook Stable;
--\\$5,858,000 class B-2 certificates 'Asf'; Outlook Stable;
--\\$4,352,000 class B-3 certificates 'BBB'sf'; Outlook Stable;
--\\$1,841,000 class B-4 certificates 'BBsf'; Outlook Stable.

Exchangeable Certificates:
--\\$311,489,000 class A-1 exchangeable certificates 'AAAsf'; Outlook Stable;
--\\$311,489,000 class A-2 exchangeable certificates 'AAAsf'; Outlook Stable;
--\\$288,223,000 class A-3 exchangeable certificates 'AAAsf'; Outlook Stable;
--\\$288,223,000 class A-4 exchangeable certificates 'AAAsf'; Outlook Stable;
--\\$216,167,000 class A-5 exchangeable certificates 'AAAsf'; Outlook Stable;
--\\$72,056,000 class A-7 exchangeable certificates 'AAAsf'; Outlook Stable;
--\\$23,266,000 class A-9 exchangeable certificates 'AAAsf'; Outlook Stable;
--\\$311,489,000 class A-X-2 exchangeable notional certificates 'AAAsf'; Outlook Stable;
--\\$288,223,000 class A-X-3 exchangeable notional certificates 'AAAsf'; Outlook Stable.

The \\$2,678,266 class B-5 certificates and \\$334,755,266 class A-IO-S notional certificates will not be rated.

KEY RATING DRIVERS
The collateral pool consists of very high-quality fixed-rate, fully amortizing loans to borrowers with strong credit profiles, low leverage and liquid reserves. All but one loan has a 30-year original term to maturity. The pool has a weighted average (WA) FICO score of 773 and an original combined loan-to-value (CLTV) ratio of 68%. The average amount of liquid reserves is slightly lower for this pool relative to other recent Agate Bay transactions with comparable profiles, but more than 29% of the borrowers still have reserves in excess of 30% of their mortgage amount.

Geographic Concentration Risk: The pool's primary concentration risk is California, where 49.9% of the properties are located. In addition, the metropolitan areas encompassing San Francisco, Los Angeles, San Jose and San Diego combine for 43.4% of the collateral balance and represent four of the top 10 regions. The regional concentration resulted in an additional penalty to the pool's lifetime probability of default (PD) of roughly 6%.

Retail Channel: Retail originations account for 61% of the pool, which have a lower risk of default relative to third-party originated loans. The channel was confirmed by the third-party due diligence firm, Clayton Holdings LLC (Clayton), by reviewing the 1003 (mortgage application), loan approval, initial disclosure, HUD-1, note, mortgage and lock agreements.

Robust Representation Framework: Fitch considers the transaction's representation, warranty and enforcement (RW&E) mechanism framework to be consistent with Tier 1 quality. The transaction benefits from a life-of-loan representation and warranty (R&W), as well as a backstop by the seller, TH TRS, in case of insolvency or dissolution of the related originator. Similar to recent transactions rated by Fitch, ABMT 2015-7 contains binding arbitration provisions that may serve to provide timely resolution to R&W disputes.

Originators with Limited Performance History: Many of the loans were originated by lenders with a limited non-agency performance history. However, all the loans were originated to meet TH TRS's purchase criteria and were reviewed by a third-party due diligence firm to TH TRS's guidelines with no material findings. TH TRS is a wholly owned subsidiary of Two Harbors Investment Corp. In addition, Fitch conducted an in-depth call with three of the top five originators which account for 30% of the pool.

Extraordinary Expense Treatment: The trust provides for expenses, including indemnification amounts and costs of arbitration, to be paid by the net WA coupon (WAC) of the loans, which does not affect the contractual interest due on the certificates. Furthermore, the expenses to be paid from the trust are capped at \\$300,000 per annum (\\$125,000 for the trustee), which can be carried over each year, subject to the cap until paid in full.

Safe-Harbor Qualified Mortgages: All the loans in the pool have application dates of Jan. 10, 2014 or later and are, therefore, subject to the ability-to-repay (ATR)/qualified mortgage (QM) Rule. All the loans subject to this rule were classified as safe harbor QM (SHQM), for which no adjustment was made.

RATING SENSITIVITIES
After Fitch determines credit ratings through a rating stress scenario analysis, additional sensitivity analyses are considered. The analyses provide a defined stress sensitivity to demonstrate how the ratings would react to steeper market value declined (MVDs) than assumed at issuance as well as a defined sensitivity that demonstrates the stress assumptions required to reduce a rating by one full category, to non-investment grade, and to 'CCCsf'.

The defined stress sensitivity analysis focuses on determining how the ratings would react to steeper MVDs at the national level. The analysis assumes MVDs of 10%, 20%, and 30%, in addition to the model projected 8% for this pool. The analysis indicates there is some potential rating migration with higher MVDs, compared with the model projection.

Fitch also conducted defined rating sensitivity analyses which determine the stresses to MVDs that would reduce a rating by one full category, to non-investment grade, and to 'CCCsf'. For example, additional MVDs of 6%, 30% and 48% could potentially lower the 'AAAsf' rated class one rating category, to non-investment grade, and to 'CCCsf'.

DUE DILIGENCE USAGE
Fitch was provided with due diligence information from Clayton Holdings LLC. The due diligence focused on a compliance, credit, valuation and data integrity review. Fitch considered this information in its analysis and the findings did not have an adverse impact on our analysis.

Fitch received certifications indicating that the loan-level due diligence was conducted in accordance with Fitch's published standards for credit, property valuation and legal/regulatory compliance. The certifications also stated that the company performed its work in accordance with the independence standards, per Fitch's criteria.