A pool of first-lien, fixed- and adjustable-rate residential mortgage loans extended to both prime and non-prime borrowers will support $337.6 million in residential mortgage-backed securities (RMBS), from the Santander Mortgage Asset Receivable Trust 2026-NQM3.
The deal will issue fixed-rate notes through about 11 tranches of class A, M and B notes, and the A1 through A3 notes will receive an additional step-up interest rate of 1.00%, subject to the pool's net weighted average coupon, according to S&P Global Ratings.
The structure includes two tranches, A-1FCF and A-1LCF that are first- and last-cash flow tranches, respectively. They benefit from the same types of credit support features—excess spread and a senior-subordinate repayment structure—but they will receive principal at very different times.
Regardless of whether a trigger is in place, A-1FCF will always receive principal first until that balance is reduced to zero, and then to A-1LCF until it is fully paid off, S&P said.
Deutsche Bank Securities is managing the deal, which is slated to close on March 26, 2026, according to Asset Securitization Report's deal database.
Notes are slated to mature on March 25, 2066, according to S&P. They will repay noteholders following a combined structure where the senior notes are repaid on a pro rata basis, and the mezzanine and subordinate bonds will be repaid sequentially.
The A1 and A1A tranches contain the bulk of notes, with a combined $221.6 million in notes, the rating agency said.
All the class A1 tranches benefit from credit enhancement levels of 29.35%, except the A1A slice, which will receive enhancement levels of 39.35%, S&P said.
The collateral pool includes 594 fully amortizing loans, and most of them, representing 66% of the pool balance, are investment property loans. They were extended to consumers using debt service coverage ration (DSCR) underwriting, S&P said. Borrowers had an average loan balance of $440,208, an original cumulative loan-to-value (CLTV) ratio of 72.56%, and a FICO score of 740 on a weighted average (WA) basis.
A sizeable proportion of borrowers are self-employed, and they have a debt-to-income ratio of 34.57%, S&P said. Interest-only loans account for only 19.3% of the pool.
S&P assigns ratings of AAA to the A1 notes; and AA and A to the A2 and A3 notes, respectively. Classes M, B1 and B2 received ratings of BBB, BB and B, respectively.
