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.

Non-agency lenders will no longer have to look to stringent underwriting requirements set by the CFPB, which will likely shift some non-QM lending in-to the QM sector.

Goldman is set to issue a prime non-agency MBS backed by new production while affiliates of Caliber and Verus brought deals collateralized by seasoned loans.

Citadel rebrands as Acra Lending; minimal non-agency MBS downgrades following review by Fitch; non-QM impairments decline; non-agency forbearance down slightly.

The mortgage market was expected to be ready to take on the 43% DTI ratio limit for qualified mortgages by 2021. However, it didn’t work out that way.