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.

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.)

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.

Impac increased its emphasis on non-QM lending in the first quarter of 2022 and ended up taking a loss. Officials at the nonbank said hedging and other activities couldn’t overcome volatility in the non-QM market.

Altisource setting up alternative lending operations; Reverse Mortgage Funding offers non-agency MBS with proprietary reverse mortgages; Dovenmuehle assessed as “above average” by Moody’s.

A handful of real estate investment trusts acquired non-QMs at a discount as interest rates increased during the first quarter. Lenders selling the loans took some losses but appear to have weathered the storm.

MFA Financial took a large loss in the first quarter as rising interest rates reduced the value of non-QMs on the REIT’s balance sheet. Lima One, a business-purpose lender now owned by MFA, was a bright spot.

Barclays sourced many of the mortgages in the MBS from Invigorate Finance, an aggregator founded in March 2021.