AGMIT sold off the last of its investments in commercial mortgages in September, with plans to increase investments in non-QMs and other non-agency mortgages.

The share of securitized non-QMs that are delinquent or modified increased in August for the first time since February. Still, industry analysts are comfortable with the long-term outlook for performance.

The switch in QM standards that many lenders had to make in July didn’t have a major impact on spreads between interest rates on mortgages and the average prime offer rate. Most mortgages continue to receive safe harbor QM status.

Amid the change in quarterly periods and SFA’s annual conference, four issuers of non-agency MBS launched deals in early October.

FHFA scraps plan to allow non-agency mortgages on common securitization platform; non-agency forbearance declines; Redwood makes another venture investment; Plaza resumes non-QM program; FoA allowing jumbo borrowers to use income from ADUs; Invictus hires dv01.

Close to $15 billion of GSE-eligible mortgages have gone into non-agency MBS this year, including many loans for investment properties and second homes. That’s expected to slow due to a removal of restrictions on the GSEs.

Some non-agency lenders are using the newer QM standards, which allow more loans to receive QM status. Others are waiting to see if the CFPB will alter the provisions.

Redwood’s already generating record volume in its lending/aggregation business, with plans to increase activity and expand its footprint. The firm might also eventually drop its real estate investment trust status.

Sector-wide, bank and thrift holdings of first-lien mortgages declined by 1.4% during the second quarter. Among three big banks, trends varied.

Underwriting based on debt service coverage ratios is on the rise. The loans differ from GSE-eligible mortgages in that underwriting is based on income generated by the property rather than looking to the borrower’s DTI ratio.