Non-agency MBS brought to the market in the past two weeks were primarily stocked with jumbo mortgages and GSE-eligible loans for investment properties. There were also a few expanded-credit deals.

UWM has its own non-agency MBS shelf, allowing the lender/servicer to directly issue deals. However, the company continues to contribute mortgages to non-agency MBS issued by others.

Nearly $4.0 billion of non-agency MBS with mortgages for investment properties was on offer in the past two weeks. Many of the deals are backed by GSE-eligible mortgages.

Institutional investors have several advantages compared to owner-occupant borrowers when it comes to purchasing homes that need substantive repairs.

GSE-eligible mortgages for investment properties are reshaping the prime non-agency MBS market. The loans have somewhat looser underwriting standards than what’s typically seen on prime jumbos. (Includes three data charts.)

While caps on GSE acquisitions of loans for investment properties were suspended mid-September, non-agency issuers continue to package the loans in their MBS. Three firms entered the sector during October.

Prime jumbos and loans eligible for sale to the GSEs helped propel the non-agency MBS market to a post-2010 record in the third quarter of 2021. Issuance of expanded-credit MBS lagged. (Includes data chart.)

Issuers are still stocking non-agency MBS with GSE-eligible mortgages for investment properties. Lenders and issuers are considering their options following a suspension of limitations placed on the GSEs.

The industry was hoping the FHFA and the Treasury Department would roll back the restriction placed on the GSEs’ use of the qualified mortgage patch.

Close to $15 billion of GSE-eligible mortgages have gone into non-agency MBS this year, including many loans for investment properties and second homes. That’s expected to slow due to a removal of restrictions on the GSEs.