Originations of non-QMs tend to be more heavily weighted toward purchase mortgages than the broader mortgage origination market. Lenders are working to advise loan originators on the unique product offerings in the sector.

Sterling Bank and Trust reached a settlement over faulty disclosures on the bank’s now shuttered non-QM program. The bank has upped reserves for further potential losses stemming from repurchases and loan sales.

Three expanded-credit MBS totaling $781 million and two jumbo MBS at a combined $955 million were brought to the market.

Shellpoint processed more than 25% of the dollar volume of non-agency MBS issued in 2020. Servicers continue to grapple with elevated delinquencies, forbearance and concerns about disclosures. (Includes data chart.)

The non-QM market is poised for a comeback, helped by strong demand from investors in the secondary market. However, production is lagging as lenders continue to focus on agency refis.

It’s taking longer to originate non-qualified mortgages and offload the product due to capacity constraints at due diligence providers and other third-party vendors.

A significant portion of non-QMs could meet new standards for qualified mortgages, according to Kroll Bond Rating Agency. It’s also possible that the CFPB will alter the standards before they take effect.

Chase is set to issue a $1.03 billion MBS backed by newly originated jumbos. Meanwhile, Credit Suisse and MFA have deals with slightly seasoned non-QMs and investment-property loans.

Some analysts expect prime non-agency MBS issuance to increase by 60% in 2021. Expanded-credit deals are also likely to rebound.

The REIT set a company record for locked jumbo business in the third quarter and then went on to break it in the fourth quarter. Redwood is focusing on prime jumbos as its expanded-credit lending has stalled.