Radian is following Arch among private mortgage insurers launching non-agency conduits. Officials at Radian note that its experience with private MI will help with acquisitions and sales of non-agency mortgages.

Western Asset Management Company considering a sale of its non-agency REIT; Velocity offers another small-balance commercial MBS; PennyMac ramping up jumbo originations.

Issuance of prime non-agency MBS fell sharply in the second quarter of 2022 as rising interest rates limited investor demand for the securities. Nonbanks remained the main source of prime mortgages. (Includes three data charts.)

Non-agency lenders looking to sell mortgages with lower interest rates only have whole-loan sales as an outlet as MBS investors wait for new originations.

Sprout originated about half of the loans in a new $293.5 million expanded-credit MBS from an affiliate of Lone Star Funds. Fitch Ratings assessed the deal and suggested that risks tied to Sprout were limited.

Non-QMs are a double-edged sword for lenders, offering attractive margins along with extreme volatility risk. Industry analysts suggest demand for the loans in the secondary market will recover when lenders start selling mortgages with higher interest rates.

Expanded-credit MBS have been few and far between in July while non-agency MBS issuers have yet to offer a prime deal during the month.

Fitch corrects improper upgrade to non-agency credit-risk transfer transaction; RMF offers MBS with proprietary reverse mortgages; update on crypto mortgages; LoanScorecard broadens availability of bank statement analyzer.

Two prominent non-QM lenders ceased operations in the past two weeks amid weak demand for the loans. Still, other market participants are stressing that they remain in strong operating positions.

Western Alliance Bank sold first-loss exposure on a pool of mortgages with an unpaid principal balance of $3.88 billion. The mortgages were acquired from various correspondent sellers and include many non-agency jumbos.