The Federal Reserve giveth and taketh away in the agency MBS market. And now that the central bank’s investment activity is significantly curtailed, investors are seeing some opportunities in the sector.

Both the size and the composition of the portfolios of Fannie Mae and Freddie Mac have shifted as the mortgage market slows. (Includes data chart.)

Two prominent non-QM lenders failed in recent months amid volatility in the market. Non-agency aggregators suggest that the issues were lender-specific and the market is improving.

Net interest income in the second quarter was up 28% year over year at Fannie, while investment gains were down 75% at Freddie.

A study by the European Central Bank found evidence that rating services respond to their competitive environments by either inflating ratings or altering the strictness of their rating standards.

The Department of Housing and Urban Development is bolstering efforts to expand and support secondary market access for community development financial institutions through Ginnie Mae.

Various tech developments are helping to improve operations in the MBS market. Digital mortgages, blockchain and loan-level disclosures are areas of particular interest.

Falling origination volumes and a return to loan-loss provisions point to lower net income for Fannie Mae and Freddie Mac through the end of the year.

With limited demand for refinancing, lenders are peddling other products. While nonbanks are offering home-equity loans, some lenders are selling mortgages with a reduced-fee refi option down the road.

Lenders have already priced in a recession, economists said, forecasting mortgage rates to keep moving sideways, despite the recent interest rate hike by the Federal Reserve.