Secondary market investors, especially hedge funds and private equity firms, are bidding up the price of non-qualified mortgages. That’s good news for sellers, but can it last?
Six non-agency MBS backed by newly-originated mortgages have been introduced since the beginning of the year. Issuance is ramping up after a slow December.
The move gives the regulator more direct control over Common Securitization Solutions, which is responsible for issuing and administering the uniform MBS.
REITs with non-agency operations look attractive to stock analysts as the Trump administration works to decrease the footprint of the government-sponsored enterprises. REITs cited as “top picks” include Ellington, New Residential and Starwood.
The percentage of private mortgage insurance sales tied to the GSEs’ low-downpayment programs dropped from 20% in July to 12% in December, with industry players pinning the fall on lower income thresholds.
The next few years might be even more challenging for mall loans backing commercial MBS, with refinancing seen as difficult and delinquencies ticking up, according to rating agencies.
Single-family rental securitization issuance in 2019 fell by 35%. Invitation Homes, the largest issuer of such deals in 2018, avoided the market entirely, focusing instead on more attractive types of financing.
Issuance of marketplace lending ABS is expected to increase slightly, led by optimism in the economy and improved underwriting criteria, according to rating services.
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