Home equity investment securitization deal sizes increased with issuance in November and activity is expected to remain elevated in 2026 thanks to strong demand from investors.

The request came from the CRE Finance Council, the Mortgage Bankers Association and the Securities Industry and Financial Markets Association. The groups said the disclosure requirements have negatively impacted the commercial MBS market.

Non-agency MBS issuance is up sharply this year and is expected to rise again in 2026. Delinquencies on the loans are increasing but investors are counting on cushions from home equity to help prevent losses.

SEC is looking to revise disclosure requirements to boost issuance of publicly-registered deals. Investors see some positives in private placements, which might not be easy to replicate in the public market.

The sentiment among investors at the ABS East conference this week was overwhelmingly positive. Attendance at the event hit a record, and investor demand for MBS and ABS is expected to remain strong into 2026, buoyed by anticipated interest rate cuts by the Fed.

The securitization of vehicle loans and financing for a range of businesses powered an all-time record of $107.7 billion of ABS issuance during the third quarter. Carmakers dominated the issuer ranking. (Includes three data tables.)

Santander Bank is issuing a securitization of closed-end second liens sourced from Pennymac. Also, an affiliate of PIMCO is offering a securitization of seasoned HELOCs.

Expanded-credit MBS and securitizations of home equity loans helped push issuance of non-agency MBS in the third quarter of 2025 to a level last seen in 2007. (Includes three data tables.)

Residuals from securitizations can generate close to 20% in returns though the asset class carries significant risks. Nonbanks are showing a strong appetite for the asset, but there is limited liquidity.

Revisions to disclosure requirements could prompt the issuance of publicly-registered non-agency MBS, which could eventually lead to additional demand from investors.