The top two REIT MBS investors shifted their portfolios during the third quarter without adding significantly to them, while other REITs grew their holdings aggressively. (Includes data chart.)

Speakers at this year’s ABS East conference — held online — focused on how the coronavirus impacted assets and the outlook for 2021.

Investors helped nonbank servicers with their advancing obligations for delinquent mortgages this year, but the outlook is murky.

Performance on non-agency MBS has improved after the spike in late payments seen in the spring. However, borrowers who are still delinquent could prompt losses for investors.

The FHFA’s capital requirements include relatively harsh treatment of credit-risk transfer transactions from Fannie and Freddie but that view could change under the Biden administration.

Securitization of non-qualified mortgages is generating healthy profits. However, issuers face a dilemma: Originations of the product have slowed.

With a relatively high share of borrowers missing mortgage payments, investors in non-agency MBS are seeing reduced cash flows and, in some cases, losses. Though mortgage performance is improving, the outlook for investors remains uncertain.

Sterling Bank has offered to buy back all non-QMs after uncovering various problems with its lending program. Between May and July, the bank repurchased loans from five MBS, taking a loss.

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.