The California-based mortgage lender has a new CEO and plans to increase its non-QM production and issue MBS.

Recent non-agency MBS include the year’s first expanded-credit MBS, plenty of prime deals and even a security with proprietary reverse mortgages.

Issuance of non-agency MBS last year topped the volume seen pre-pandemic. Activity was concentrated on prime loans, both non-agency jumbos and GSE-eligible mortgages. (Includes data chart.)

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.

Officials at Velocity said the acquisition of an FHA multifamily lender will help to expand the company’s product offerings and serve as a hedge for its traditional focus on business-purpose lending.

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.)