Mortgages in the transaction were acquired by Western Alliance Bank on a correspondent basis and will remain on its balance sheet. Risk-sharing deals in the non-agency market are rare and largely involve megabanks.

Prospects for non-agency MBS issuance in 2022 look mixed, with expanded-credit activity expected to increase while volume involving non-agency jumbos and GSE-eligible loans could decline.

Western Asset Mortgage Capital plans to shed investments in commercial mortgages and shift to residential assets, including non-QMs. The REIT was taking losses on commercial investments.

In a familiar refrain, participants in the non-QM market suggest the sector is ready for takeoff. Still, technology in the non-QM market lags compared with the GSEs.

Some non-agency lenders are widening the credit box to uncomfortable levels, prompting discussion at the ABS East conference this week.

Expanded-credit mortgages gained market share as total first-lien originations declined in the third quarter. Still, the sector accounted for only 1.1% of the total origination pie. (Includes data chart.)

Non-agency MBS brought to the market in the past two weeks were primarily stocked with jumbo mortgages and GSE-eligible loans for investment properties. There were also a few expanded-credit deals.

Angel Oak is the latest expanded-credit lender to offer mortgages based on an individual tax identification number to individuals not eligible to obtain a Social Security number.

UWM is offering its first non-QM product in years; the impairment rate on securitized non-QMs declined somewhat in October.

MFA Financial posted a sharp increase in income, driven by its focus on buying non-agency mortgages and its acquisition of Lima One, a business-purpose lender.