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.

Investor demand for non-QM MBS is currently near levels seen before volatility in March, helping to sustain issuance volume. The deal flow could slow soon due to limited originations and economic trends.

Loans backing securitized products are holding up fairly well even though the use of forbearance has increased. A combination of investor protections and changes in underwriting practices is helping.

There’s a lack of standardization among non-agency MBS servicers regarding reporting of loans in forbearance. Investors are having difficulties understanding what exactly servicers are doing.

With overnight funding in the agency repo market hovering around 15 basis points and term repo rates a shade above the one-month LIBOR, yields for agency mREITs could edge upward, KBW analysts predict.

Demand for non-agency MBS has increased significantly in recent weeks after investors fled the market in late March and April. Issuance has been driven by somewhat seasoned non-qualified mortgages.

When the pandemic struck this spring, non-QM sales in progress fell apart involving some heavy hitters like NewRez. Now those loan buyers are getting sued for reneging on their contracts.

The two real estate investment trusts saw red ink in the first quarter as they were forced to sell assets when prices plummeted. MFA raised capital this week while AGMIT is considering its options.

An advisory panel has called for greater transparency around credit ratings. SEC officials say the reforms could be difficult to implement.