KBRA Assigns Preliminary Ratings to New Residential Mortgage Loan Trust 2025-NQM7 (NRMLT 2025-NQM7)
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non-prime rmbsfinancial
Non-prime RMBS are bonds made by pooling home loans that come from borrowers with weaker credit histories, smaller down payments, or other loan features that raise the chance of missed payments. Think of buying a mixed crate of fruit where some pieces are more likely to spoil: these securities can offer higher yields but are more sensitive to housing market stress and borrower defaults, so investors weigh greater return against greater risk.
loan-to-value (ltv)financial
Loan-to-value (LTV) is the ratio of a loan amount to the value of the asset used as collateral, expressed as a percentage; for example, a $80,000 loan on a $100,000 property has an LTV of 80%. It matters to investors because higher LTVs mean greater risk of loss if the asset falls in value—like borrowing most of the price of a car, leaving little buffer—so lenders charge higher rates or restrict lending, affecting credit availability and borrower default risk.
combined ltv (cltv)financial
Combined loan-to-value (CLTV) measures the total amount owed across all loans secured by a single property divided by that property's current market value. Investors use it to gauge how much of the asset is financed and how much price decline the collateral can absorb—higher CLTV means less cushion before debt exceeds value, raising default and loss risk. It influences lender pricing, recovery prospects and the risk profile of mortgage-backed or real-estate-related investments.
fixed-rate mortgages (frms)financial
A fixed-rate mortgage (FRM) is a home loan where the interest rate stays the same for the life of the loan, so monthly principal and interest payments remain steady like a fixed monthly rent. For investors, FRMs matter because they concentrate interest-rate risk and predictable cash flows: when rates fall borrowers often refinance (changing cash flows), and when rates rise the value of existing mortgage-backed assets can change, affecting banks, bond markets and mortgage-backed securities.
interest-onlyfinancial
A loan or payment plan where the borrower pays only the interest for a set period while the original loan amount (the principal) stays unchanged; after that period payments typically rise to cover principal or a lump-sum principal payment is due. For investors this matters because interest-only structures change cash flows and risk: they can boost short-term income but increase the chance of payment shock or default later, similar to renting a car without paying down the purchase cost until the final bill arrives.
residential asset loss model (realm)technical
A residential asset loss model (REALM) is a computerized tool that estimates how much value homes and other residential properties could lose after events like storms, floods, fires or long-term hazards. For investors, it works like a weather forecast for money: it translates physical damage and repair costs into likely financial losses, helping to price risk, set insurance reserves, and stress-test real estate portfolios or mortgage-backed securities.
rmbsfinancial
Residential mortgage-backed securities (RMBS) are investments made by pooling many home loans and selling slices of the resulting stream of mortgage payments to investors. They matter because they convert homeowners’ monthly payments into tradable income: the cash you receive and the price you pay depend on borrowers’ ability to pay, interest rates and housing market health—think of buying a share in a neighborhood’s mortgage cash flow, with corresponding income and risk.
reitfinancial
A real estate investment trust (REIT) is a company that owns, operates, or finances income-producing real estate, like shopping centers, apartments, or office buildings. For investors, REITs offer a way to invest in real estate without having to buy property directly, often providing regular income through dividends. They function like a mutual fund for real estate, making it easier for people to add property investments to their portfolio.
NEW YORK--(BUSINESS WIRE)--
KBRA assigns preliminary ratings to 10 classes of mortgage-backed notes from New Residential Mortgage Loan Trust 2025-NQM7 (NRMLT 2025-NQM7), a $493.7 million non-prime RMBS transaction sponsored by Rithm Capital Corp. (formerly New Residential Investment Corp.), a publicly traded (NYSE: RITM) real estate investment trust (REIT). The underlying mortgages in the subject pool were primarily originated by NewRez LLC (48.7%) and Champions Funding, LLC (16.1%). In addition, all loans will be serviced by NewRez LLC.
NRMLT 2025-NQM7 is collateralized by a pool of 915 residential mortgages. Borrowers in NRMLT 2025-NQM7 possess a non-zero WA original credit score of 757 and exhibit a weighted average (WA) original loan-to-value (LTV) of 72.2% and a WA combined LTV (CLTV) of 72.3%. The loans are seasoned approximately four months and consist of 99.3% fixed-rate mortgages (FRMs). Approximately 10.6% of the pool has an initial interest-only period.
KBRA’s rating approach incorporated loan-level analysis of the mortgage pool through its Residential Asset Loss Model (REALM), an examination of the results from third-party loan file due diligence, cash flow modeling analysis of the transaction’s payment structure, reviews of key transaction parties and an assessment of the transaction’s legal structure and documentation. This analysis is further described in our U.S. RMBS Rating Methodology.
To access ratings and relevant documents, click here.
Further information on key credit considerations, sensitivity analyses that consider what factors can affect these credit ratings and how they could lead to an upgrade or a downgrade, and ESG factors (where they are a key driver behind the change to the credit rating or rating outlook) can be found in the full rating report referenced above.
A description of all substantially material sources that were used to prepare the credit rating and information on the methodology(ies) (inclusive of any material models and sensitivity analyses of the relevant key rating assumptions, as applicable) used in determining the credit rating is available in the Information Disclosure Form(s) located here.
Information on the meaning of each rating category can be located here.
Further disclosures relating to this rating action are available in the Information Disclosure Form(s) referenced above. Additional information regarding KBRA policies, methodologies, rating scales and disclosures are available at www.kbra.com.
About KBRA
Kroll Bond Rating Agency, LLC (KBRA), one of the major credit rating agencies (CRA), is a full-service CRA registered with the U.S. Securities and Exchange Commission as an NRSRO. Kroll Bond Rating Agency Europe Limited is registered as a CRA with the European Securities and Markets Authority. Kroll Bond Rating Agency UK Limited is registered as a CRA with the UK Financial Conduct Authority. In addition, KBRA is designated as a Designated Rating Organization (DRO) by the Ontario Securities Commission for issuers of asset-backed securities to file a short form prospectus or shelf prospectus. KBRA is also recognized as a Qualified Rating Agency by Taiwan’s Financial Supervisory Commission and is recognized by the National Association of Insurance Commissioners as a Credit Rating Provider (CRP) in the U.S.
