Non-QM impairments decline after two-month increase; Balbec unit offers non-QM MBS with loans from Sprout; new CIO at Redwood; Velocity quickly packages business-purpose loans.
Delinquencies on expanded-credit MBS are increasing but investors in the deals appear to be protected at the moment. A review of the sector by Fitch prompted many upgrades and no downgrades.
Spreads had steadily widened in the expanded-credit sector between February and July. But as spreads declined in August, demand for expanded-credit MBS appears to have improved.
MISMO is getting close to releasing revised standards for data collection in the non-agency MBS market. The effort could prompt efficiencies for lenders, due diligence firms and rating services.
Improvements to practices in the non-agency MBS market will help to protect investors from lenders that don’t make it through the current market contraction, according to Kroll Bond Rating Agency.
Investors that once focused on lower tranches of non-agency MBS are shifting up in credit, seeing just as strong returns from AAA-rated tranches with fewer risks. Investors in agency MBS are also changing strategies as interest rates rise.
In 2020, the SEC made a move to apply a disclosure rule that had been in effect for nearly 30 years to MBS and ABS. Industry participants have been able to delay enforcement of the rule while seeking changes to the disclosure requirements.