KBRA Assigns Preliminary Ratings to New Residential Mortgage Loan Trust 2026-NQM8 (NRMLT 2026-NQM8)

KBRA has issued preliminary ratings for 10 classes of mortgage-backed notes from the New Residential Mortgage Loan Trust 2026-NQM8, a $480.2 million non-prime residential mortgage-backed securities transaction. Sponsored by Rithm Capital Corp., the deal is collateralized by a pool of 883 residential mortgages that have been seasoned for approximately three months. This transaction underscores the ongoing activity in the Non-QM sector as REITs and lenders seek to securitize high-credit-score loans that fall outside traditional agency guidelines.

The NRMLT 2026-NQM8 transaction is backed by a pool of 883 residential mortgages with a total value of approximately $480.2 million. These loans are primarily classified as non-prime or non-qualified mortgages (Non-QM) and have been seasoned for roughly three months. The pool's originations are concentrated among two main entities, with NewRez LLC accounting for 51.3% of the loans and Champions LLC contributing 20.3%. NewRez LLC will also serve as the primary servicer for all loans within the trust.

Borrower profiles within the collateral pool reflect a high credit quality despite the non-prime classification, featuring a weighted average original credit score of 751. The underlying mortgages also demonstrate conservative leverage, with a weighted average original loan-to-value (LTV) ratio and a weighted average combined LTV (CLTV) both standing at 71.1%. These metrics suggest a focus on high-equity borrowers who may not meet standard agency requirements due to alternative income documentation or other non-traditional factors.

KBRA utilized its Residential Asset Loss Model (REALM) to conduct a comprehensive loan-level analysis of the mortgage pool. The rating process also involved reviewing third-party due diligence on loan files, performing cash flow modeling of the payment structure, and assessing the legal documentation and key transaction parties. This rigorous evaluation ensures that the preliminary ratings for the 10 classes of notes accurately reflect the credit risks and structural protections inherent in the RMBS offering.