JPMorgan Chase Bank has created a synthetic credit-linked note to transfer credit risk on a pool of jumbo mortgages. Unlike traditional MBS, loans in the transaction will remain on the bank’s balance sheet.
Issuance of non-agency MBS slowed near the end of the third quarter but presale reports for a number of deals have been published this month and more securities are on the way.
The CFPB is considering whether to provide QM status to mortgages that didn’t miss payments in the early years after origination. The proposal has support from some lenders.
There’s no consensus among industry participants on how the CFPB should address the “patch” for qualified mortgages. However, lenders generally agree that Appendix Q of the ATR rule needs a major overhaul.
The debate around the qualified mortgage “patch” has shifted to whether the non-agency market can handle the volume that currently is delivered to the GSEs.
Originations of non-QMs are set to increase along with issuance of MBS backed by the loans. Investors in the secondary market are helping to fuel the growth.
Non-QM MBS from affiliates of Angelo Gordon and Caliber Home Loans are in the works along with a deal backed by investment-property mortgages from JPMorgan Chase.
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