If banks meet the safe harbor requirements, the FDIC won’t reclaim assets from a non-agency MBS if a bank is subsequently placed in conservatorship or receivership.

The $638.2 million MBS follows a $788.9 million deal that Chase brought to market in August. Only a handful of MBS from other issuers this year have topped $400 million...

The planned $681.0 million issuance will top a $609.2 million deal Invictus issued in May.

Higher-priced mortgages are a regulatory designation based on the comparison of the annual percentage rate on a mortgage with the average prime offer rate, which tracks rates offered to prime borrowers.

Angel Oak issued two non-QM MBS earlier this year that each topped $600 million. The new offering is sized at $353 million.

Industry analysts attribute the rise to a search for yield by investors along with increased acceptance of non-QMs in the investor community.

After the transaction closes, business-purpose lending investments will account for more than 15% of Redwood's investment portfolio, up from a 4% share.

Those in favor of the concept include: JPMorgan Chase, PennyMac Financial Services, the Housing Policy Council and the Structured Finance Association…

The new MBS differs in some ways from previous expanded-credit issuance from Annaly, including a reduced reliance on mortgages from Banc of California and an increase in investment-property loans.