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.
Issuance of expanded-credit MBS flowed in the first half of the year even as lenders grappled with higher interest rates. Issuance is expected to slow as lenders work to establish a new supply of loans with higher interest rates.
Moody’s downgraded some of the tranches in loanDepot’s outstanding warehouse financing securitizations even after the company modified the transactions’ governing documents to meet new criteria.
Most companies that issued non-agency MBS with GSE-eligible investment-property loans during the fourth quarter haven’t offered similar deals thus far in 2022.
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