MFA Financial posted a sharp increase in income, driven by its focus on buying non-agency mortgages and its acquisition of Lima One, a business-purpose lender.
AG Mortgage Investment Trust more than doubled its net income in the third quarter as it shifted its focus to non-agency mortgages. AGMIT is sourcing many of its mortgage acquisitions from an affiliated lender.
The public REIT portion of the Angel Oak Companies non-QM machine nearly tripled its income in the third quarter thanks to an increase in loan acquisitions and an MBS issuance.
The lender is increasing its originations of non-QMs, which helped it generate a profit for the third quarter. Still, non-QM pricing declined early in the fourth quarter and there are additional costs tied to originating the loans.
The largest non-agency MBS on offer in the past two weeks was a $762 million deal from United Wholesale Mortgage. Barclays Capital is also set to issue an expanded-credit MBS.
After years of contributing loans to expanded-credit MBS issued by others, AmWest came to market with its own deal in September. Angel Oak ranked second among contributors to EC MBS issued in the third quarter. (Includes three data charts.)
Non-agency MBS can generate returns in the mid-teens, according to some issuers. Also, a reduction of limitations placed on the GSEs isn’t expected to slow non-agency MBS issuance of GSE-eligible loans.
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.)
AGMIT sold off the last of its investments in commercial mortgages in September, with plans to increase investments in non-QMs and other non-agency mortgages.
The share of securitized non-QMs that are delinquent or modified increased in August for the first time since February. Still, industry analysts are comfortable with the long-term outlook for performance.