Prepayment rates on mortgage-backed securities with non-qualified mortgages have slowed due to interest rate trends and a shift in borrower characteristics, according to industry analysts.
The Structured Finance Industry Group’s years-long effort to reform practices in the non-agency mortgage-backed security market is nearly complete. However, it’s not clear whether the practices will be widely adopted by MBS issuers.
Fannie Mae and Freddie Mac continue to let their holdings of nonprime mortgages run off, with some differences in the rate at which the holdings are diminishing, according to a new analysis by Inside Nonconforming Markets. [Includes one data chart]
The pricing offered in the non-agency market for certain loans eligible for sale to the government-sponsored enterprises isn’t as attractive to sellers as it once was, according to industry participants.
Mortgage-backed securities with non-qualified mortgages look attractive to some real estate investment trusts. PennyMac Mortgage Investment Trust plans to join other REITs issuing non-QM MBS while officials at Chimera Investment said the firm is considering buying non-QM MBS from other issuers.
Seer Capital Management is set to issue its first mortgage-backed security with non-qualified loans. The New York-based company launched its non-QM program in 2013 and it owns HomeXpress Mortgage, a wholesale lender founded in 2016.
Redwood Trust’s mortgage banking income in the fourth quarter was essentially level compared to the previous quarter even with lower origination volume and strong competition in the non-agency market.
Activity in the non-agency mortgage market is likely to get a boost from any reforms of the government-sponsored enterprises undertaken by the Trump administration.
An affiliate of Annaly Capital Management this week issued a non-agency mortgage-backed security stocked with investment-property mortgages eligible for sale to the government-sponsored enterprises.
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