Some of the Trump-era restrictions placed on the GSEs have been put on hold for at least a year. That includes a cap on acquisitions of mortgages for investment properties.

The blueprint would reverse capital requirements set in December, which offered few incentives for the GSEs to complete credit-risk transfer transactions.

Thanks to restrictions placed on the GSEs, investment-property mortgages are flowing into non-agency MBS. Some lenders are issuing deals on their own while others are turning to aggregators like Credit Suisse.

Industry consultants are cautioning companies to take steps to ensure their fair housing compliance teams are ready to defend an expected uptick in enforcement actions.

The offerings in the non-agency MBS market range from deals backed by prime jumbo mortgages to investment-property loans that were eligible for sale to the GSEs to non-QMs.

While Fannie and Freddie refi business fell sharply in the second quarter, there were significant increases in loans with low credit scores. Meanwhile, the fastest growing sectors of the GSE purchase market had higher LTV ratios. (Includes two data charts.)

The end of the QM patch — thanks to a maneuver by the FHFA and Treasury — could help the non-agency market compete with the GSEs.

Issuance of non-agency securities increased 81.3% in the second quarter of 2021. Volume was boosted by the spike in deliveries of GSE-eligible mortgages following regulatory changes in the agency market. (Includes data chart.)

Trump-era GSE policies that helped boost activity in the non-agency market could be reversed as Biden appointees take charge at the FHFA.

Issuance of non-agency MBS with GSE-eligible loans is booming, largely due to restrictions on certain purchases by the GSEs.