Spreads on various types of residential MBS are wider than they were during the early days of the pandemic, suggesting that the assets aren’t particularly attractive to investors. However, that isn’t necessarily true.

Two prominent lenders involved in the expanded-credit market shuttered and planned MBS from major issuers are being downsized or pulled altogether.

The REIT has built up strong residential and MSR businesses to diversify risk and support its agency prowess. And while it’s held back on increasing leverage, once volatility declines, all that may change.

Recent court rulings on litigation involving non-agency MBS issued prior to 2008 are setting new precedents, with broad ramifications.

Non-QM rates are now north of 7% in many cases, but the market is still dealing with upwards of $5 billion in lower-coupon product that needs to be moved.

After a two-week lull in issuance of jumbo MBS, a handful of deals hit the market. MBS issuers are facing weak demand from investors, with whole-loan outlets often offering better pricing.

Rising interest rates and widening spreads are prompting more investor-friendly changes to expanded-credit MBS deals.

While investors in fix-and-flip and other business-purpose loans are taking a closer look at loan characteristics and lenders’ practices, lenders are adjusting and considering locking in longer-term financing.

Sprout isn’t returning media inquiries these days, but chatter is spreading about $200 million worth of non-QM loans it was trying to place.

Issuance of expanded-credit MBS slowed in April after a surge in the first quarter. Rising interest rates played a role in both moves.