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.

Production of interest-only mortgages by a select group of lenders increased by more than 65% in the second quarter. Data from HMDA provides new insight on the characteristics of IO borrowers. (Includes data chart.)

Servicing portfolios at most of the major subprime servicers are shrinking, except at Citadel Servicing. The firm has more than doubled its servicing portfolio in the past year.

Activity in the non-agency MBS market is resuming after a slowdown in the second half of August. Presale reports for five deals have been published this month, led by prime non-agency MBS.

Citi joined JPMorgan Chase as the second big bank to issue MBS backed by non-QMs. The deal was stocked with mortgages from Impac.