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

KBRA has assigned preliminary ratings to 10 classes of mortgage-backed notes from the $480.2 million New Residential Mortgage Loan Trust 2026-NQM8 (NRMLT 2026-NQM8). Sponsored by Rithm Capital Corp., the transaction is collateralized by a pool of non-prime residential mortgages primarily originated and serviced by NewRez LLC. This issuance highlights ongoing activity in the non-qualified mortgage securitization market, providing liquidity for lenders and investment opportunities for mortgage-backed security participants.

The NRMLT 2026-NQM8 transaction represents a $480.2 million securitization of non-prime residential mortgage loans, sponsored by the publicly traded real estate investment trust Rithm Capital Corp. (formerly New Residential Investment Corp.). The underlying collateral consists of 883 residential mortgages that have been seasoned for approximately three months. NewRez LLC originated the majority of the pool at 51.3%, while Champions LLC contributed 20.3% of the loans, with NewRez LLC also designated as the servicer for all loans within the trust.

The mortgage pool features a weighted average (WA) original credit score of 751, indicating a relatively high credit quality despite the non-prime classification of the assets. The loans exhibit a WA original loan-to-value (LTV) ratio of 71.1% and a WA combined LTV (CLTV) of 71.1%, suggesting significant borrower equity at the time of origination. KBRA’s preliminary ratings cover 10 distinct classes of notes within the structure, reflecting the agency's assessment of the credit risk and payment priorities of the transaction.

KBRA utilized its Residential Asset Loss Model (REALM) to perform a loan-level analysis of the mortgage pool as part of its rating process. The evaluation also included a review of third-party loan file due diligence, cash flow modeling of the payment structure, and an assessment of the legal documentation and key transaction parties. This comprehensive review ensures that the ratings account for potential losses, sensitivity to various economic factors, and the operational capabilities of the originators and servicer involved in the deal.