Prime jumbos are unlikely to account for the majority of non-agency MBS issued this year, a first for the products since the time before the financial crisis. Non-QM MBS issuance is holding up better and second-lien securitizations are building some momentum.

AB CarVal Investors and Ares Management are in the market with separate expanded-credit MBS, marking the first time either firm has offered that type of MBS.

Redwood Trust isn’t planning to ramp up acquisitions and sales of prime non-agency mortgages in the near term due to elevated interest rates and strong competition from banks for jumbos.

Prices on non-agency MBS took such a hit in 2022 that the market is now gaining popularity with investors, even with the threat of a recession. Still, new issuance in 2023 is expected to come in lower on an annual basis.

KBRA said that third-quarter MBS issuance volume didn’t meet its expectations and will drop rapidly in the coming year. Meanwhile, both DBRS and Moody’s noted that performance is stabilizing. 

Community development financial institutions are exempt from some ability-to-repay rules and can provide up to 40% of their financial services to customers outside their targeted underserved community.

Production of non-agency MBS suffered a third-straight sharp decline in quarterly issuance. The biggest hit was in the prime RMBS sector, where jumbo securitization dropped and GSE-eligible activity nearly disappeared.

Pacific Western Bank started acquiring residential mortgages in March 2021. PacWest is now done acquiring loans and looking to share credit risk on a pool with an unpaid principal balance of $2.68 billion.

Angel Oak Capital Advisors and a portfolio manager with the company settled with the SEC, which alleged improper reporting of delinquencies on a fix-and-flip securitization issued by Angel Oak in 2018.

There’s nowhere to hide for non-agency MBS issuers as quickly rising interest rates prompt losses. Loans the issuers are looking to sell have seen limited demand and lose value when retained even short-term.