As much as $20 billion of GSE-eligible mortgages could go into non-agency MBS annually due to new restrictions on GSE acquisitions of mortgages for investment properties and second homes.
It marks the first residential MBS rated by Kroll that aligns with a social bond framework. Fitch Ratings also rated the deal, though the firm appeared to be somewhat less impressed.
Months of improvements in the performance of non-agency MBS stalled earlier this year, though delinquencies resumed a downward trend at the end of March.
Non-agency outlets are seeing a surge in the supply of non-owner-occupied loans due to caps recently placed on GSE business. Non-agency MBS issuance is expected to increase, though pricing for jumbos is also declining.
In April, issuers offered $4.95 billion of prime non-agency MBS across nine deals. Meanwhile, only two expanded-credit MBS hit the market, totaling $735.58 million.
After complaints from MBS investors regarding the reporting of performance of loans in non-agency deals, the Structured Finance Association released voluntary standards that could address the issue.
Securitization of non-agency prime and Alt A mortgages ramped up significantly in the first quarter, although subprime MBS issuance dropped to its lowest level since 2017. RPL/NPL transactions remained the biggest component in the non-agency MBS market. (Includes three data charts.)
“Issue debt while you can.” That seems to be the mantra of nonbank mortgage lenders and even real estate mortgage investment trusts. The latest sellers: UWM and PennyMac.
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