Issuers of prime non-agency MBS are completing deals with mortgages originated after the market volatility of March while expanded-credit MBS continue to be stocked with older loans.

Issuance in the MBS and ABS markets seems to be humming along with tighter spreads. But industry participants warn investors should beware of over-optimism.

There’s little uniformity in how non-agency MBS issued before 2018 will address the end of LIBOR. The majority of deals will switch to a fixed rate, while others allow for an alternative reference rate.

Demand for non-QM MBS has returned to pre-pandemic levels even though the deals include a significant amount of loans in forbearance and fewer protections for investors.

Following in the footsteps of Citi and JPMorgan Chase, Wells Fargo is preparing to issue a non-qualified mortgage MBS. The bank plans to securitize small pools of its non-agency originations on a regular basis.

The security will be backed by non-qualified mortgages originated by A&D Mortgage, an affiliated lender.

Issuance of expanded-credit MBS was expected to remain suppressed after volatility in March halted activity. After a strong second quarter, industry analysts revised their projections.

Hoping to buy non-QMs on the cheap for an upcoming securitization? Forget it. The bargains are all gone. The good news: New lending is increasing from severely muted levels.

The real estate investment trust is ready to take non-agency loan aggregation to pre-crisis levels, and believes investors are seeking the types of assets the company offers.

Even though a sizable portion of mortgages originated earlier in the year are in forbearance, investor demand for MBS backed by those loans is strong.