Rating services are requiring higher credit enhancement levels and taking negative actions on outstanding deals due to problems stemming from the coronavirus. Fitch finalized new criteria for residential MBS late last week.

Demand for non-agency MBS has increased significantly in recent weeks after investors fled the market in late March and April. Issuance has been driven by somewhat seasoned non-qualified mortgages.

Arbor Realty Trust issued a $727.2 million non-agency multifamily MBS. For the most part, these deals are uncommon because the GSEs dominate the market.

The non-QM whole loan market appears to have turned the corner from its recent doldrums. Some bids are now close to par.

The industry wants the SEC to align disclosure norms for publicly registered non-agency MBS with those followed in private placements.

A non-QM MBS closed last week and deals from other issuers are in the works. A prime non-agency MBS with newly originated loans was also introduced.

After non-agency MBS issuance all but froze in March, issuers are beginning to return to the market. Neuberger Berman issued a non-QM MBS this week and others are working on deals as well.

The bulk of non-agency MBS currently being issued is backed by seasoned mortgages. Rating services are also adjusting criteria to account for the coronavirus.

A month ago, investors were gobbling up MBS with non-QMs. Now, the sector is shut down due to the upheaval caused by the coronavirus.