Securitization of home equity loans increased again in the first quarter, driven by closed-end second liens. Issuance is growing exponentially, helped by nonbanks and investor demand. (Includes two data tables.)
At one point, First Republic Bank was a major contributor to non-agency MBS. In recent years, the bank retained its production, though JPMorgan Chase could move to sell the loans.
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.
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.
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.