Issuance of prime non-agency MBS will likely increase this year, according to projections by industry analysts. The big wildcard is how FHFA’s efforts to reduce the GSEs’ footprint will impact the non-agency market.
The lender plans to raise around $100 million through an initial public offering of shares. Velocity funded about $1.0 billion of originations in 2019, focused on residential investment and small commercial properties.
After a lull in December, issuers are bringing non-agency MBS to the market. Redwood Trust is planning a deal with seasoned mortgages while New Residential has an expanded-credit MBS.
While 12 firms are deemed as acceptable by Fitch Ratings to review loans in MBS rated by the agency, two firms, SitusAMC and Clayton, handled nearly all reviews in recent years.
A non-agency MBS from Provident suggests better execution for GSE-eligible mortgages in the non-agency market. But analysts don’t expect a flood of non-agency MBS with GSE-eligible loans.
Expanded-credit MBS issuance looks likely to increase again in 2020, but not at the exponential growth rate seen since the sector emerged in 2015. A major variable is how the CFPB will address the QM patch.
Provident Funding Associates is set to issue a non-agency MBS with mortgages eligible for sale to the GSEs. The types of loans in the deal differ from previous non-agency MBS packed with Fannie/Freddie-eligible mortgages.
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