Fannie removed some loans from its MBS early; Guaranteed Rate restructured a jumbo MBS before issuance; the GSEs are prepping separate risk- sharing transactions.
Non-agency MBS on offer in recent weeks include deals backed solely by mortgages originated by a Community Development Financial Institution, non-agency mortgages for investment properties and proprietary reverse mortgages.
Six issuers offered expanded-credit MBS in recent days, ending a nearly 30-day pause in issuance. Loans in the deals have seasoned for longer than the turn times seen for prime non-agency MBS.
The latest MBS from Blackstone includes non-agency mortgages for investment properties from various lenders. The firm’s pre-pandemic non-agency MBS were backed by loans from Finance of America.
UWM has its own non-agency MBS shelf, allowing the lender/servicer to directly issue deals. However, the company continues to contribute mortgages to non-agency MBS issued by others.
Nearly $4.0 billion of non-agency MBS with mortgages for investment properties was on offer in the past two weeks. Many of the deals are backed by GSE-eligible mortgages.
Spreads on jumbo MBS widened in recent months as the supply of prime non-agency MBS surged. Redwood Trust opted for more whole-loan sales during the third quarter while JPMorgan Chase remained an active MBS issuer.
While caps on GSE acquisitions of loans for investment properties were suspended mid-September, non-agency issuers continue to package the loans in their MBS. Three firms entered the sector during October.
The difference between interest rates on non-QMs in MBS and the interest rate paid to investors in the securities is helping to protect investors from losses. Excess spread in the sector increased as seasoned loans were repackaged.