KBRA Assigns Preliminary Ratings to Sequoia Mortgage Trust 2026-1 Prime RMBS Transaction
KBRA has assigned preliminary credit ratings to 76 classes of mortgage pass-through certificates issued by Sequoia Mortgage Trust 2026-1 (SEMT 2026-1), a $672.1 million prime residential mortgage-backed securities (RMBS) transaction. The securitization is backed by a pool of high-quality residential mortgage loans and reflects conservative underwriting characteristics and strong borrower credit profiles.The underlying collateral consists of 546 first-lien, fully amortizing, fixed-rate residential mortgage loans, the majority of which carry 30-year maturity terms. The mortgage pool demonstrates robust credit quality, with a weighted average original borrower credit score of 779, indicating a predominantly prime borrower base. Borrower equity levels are moderate, with both the weighted average original loan-to-value (LTV) and combined loan-to-value (CLTV) ratios measured at 71.8%, providing meaningful protection against potential housing market volatility.
KBRA’s analytical process for SEMT 2026-1 incorporated a comprehensive loan-level evaluation using its proprietary Residential Asset Loss Model (REALM). This quantitative assessment was complemented by a review of third-party due diligence results, including loan file integrity and compliance checks, to validate data accuracy and underwriting quality. In addition, KBRA conducted cash flow modeling and structural analysis to evaluate the transaction’s payment waterfall, credit enhancement features, and expected performance under various stress scenarios.
The rating process also included detailed reviews of key transaction parties, such as the sponsor, servicer, and trustee, as well as an assessment of the transaction’s legal structure and documentation to ensure alignment with KBRA’s standards and investor protections. The analytical framework applied in this transaction is consistent with KBRA’s U.S. RMBS Rating Methodology, which governs the evaluation of residential mortgage-backed securities issued in the U.S. market.
Investors and market participants can access the preliminary ratings, transaction documents, and detailed analytical materials through KBRA’s platform. The full rating report provides additional insight into key credit considerations, loss and sensitivity analyses, and the potential factors that could result in future rating upgrades or downgrades. Where applicable, environmental, social, and governance (ESG) factors that materially influence the credit profile or rating outlook are also discussed.
Supporting materials related to SEMT 2026-1 include the RMBS KCAT, the SEMT 2026-1 Tear Sheet, and relevant methodological references, such as:
- Structured Finance: Global Structured Finance Counterparty Methodology
- RMBS: U.S. RMBS Rating Methodology
- ESG Global Rating Methodology
Further disclosures, including a description of all materially significant information sources, model assumptions, and rating sensitivity considerations, are available in the Information Disclosure Form(s) accompanying this rating action. Additional information regarding the meaning of each rating category, KBRA’s policies, and its broader analytical framework can also be found within the referenced disclosures.
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.
