Spreads on expanded-credit MBS issuance have widened significantly this year as lenders sell mortgages originated prior to the runup in interest rates. Issuance has slowed but market participants are optimistic in the long term.

Some non-agency lenders will allow for investment-property mortgages underwritten based on the income generated by the property where the monthly rent doesn’t cover expenses for the property.

An affiliate of Bayview Asset Management issued an MBS with small-balance commercial properties in May, marking the first issuance of its type from the firm since September 2020.

After more than a year of steady declines in delinquencies on securitized non-QMs, delinquency rates have fluctuated in recent months.

Non-agency MBS issuance nearly frozen; Redwood raises funds with debt sale; DBRS accepts more firms for due diligence.

Participants in the non-agency market note that the loans are more difficult to underwrite than typical agency mortgages. But given that agency refi business is falling, there’s still plenty of business to be had in the non-agency space.

ARMs are getting more popular with borrowers as interest rates increase. In the non-agency market, ARM originations are currently dominated by banks.

Non-agency originations of higher-priced mortgages increased by nearly 60% on an annual basis in 2021. The top lenders include a mix of expanded-credit producers and lenders that focus on manufactured homes. (Includes two data charts.)

Originations of expanded-credit mortgages helped to boost nonprime servicing portfolios in the first quarter of 2022. (Includes data chart.)

Homeowners have plenty of equity and nonbank lenders are looking to replace refinance business, leading some large nonbanks to start offering HELOCs. One complication: what to do with the assets.