KBRA assigns preliminary ratings to 8 classes of mortgage-backed certificates from Morgan Stanley Residential Mortgage Loan Trust 2025-NQM7 (MSRM 2025-NQM7). MSRM 2025-NQM7 is an RMBS transaction sponsored by Morgan Stanley Mortgage Capital Holdings LLC as seller/sponsor and includes a meaningful concentration of collateral that KBRA considers to be “non-prime.” The $417.8 million RMBS transaction is collateralized by a pool of 844 residential mortgages, with fixed-rate mortgages (FRMs) and hybrid adjustable-rate mortgages (ARMs) making up 96.8% and 3.2% of the pool, respectively. Most loans are either classified as non-qualified mortgages (Non-QM) (46.6%) or exempt (43.5%) from the Ability-to-Repay/Qualified Mortgage (ATR/QM) rule due to being originated for non-consumer loan purposes.

KBRA considers the loans in the subject pool to be non-prime due to certain loan or borrower characteristics, which include borrowers with blemished credit history and the use of bank statements and other forms of alternative documentation to document income. Hometown Equity Mortgage, LLC comprises 10.5% of the originators. The majority of the pool is serviced by Shellpoint Mortgage Servicing (70.7%) and Select Portfolio Servicing, Inc. (18.9%).

To access ratings and relevant documents, click here.

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Related Publications

• RMBS KCAT
• Morgan Stanley Residential Mortgage Loan Trust 2025-NQM7 (MSRM 2025-NQM7) Tear Sheet

Methodologies

• RMBS: U.S. RMBS Rating Methodology
• Structured Finance: Global Structured Finance Counterparty Methodology
• ESG Global Rating Methodology

Disclosures

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.

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