Demand for non-QMs in the secondary market is helping lenders loosen underwriting standards and drive down interest rates for new production. Five non-QM MBS hit the market in the past two weeks.

Production of higher-priced conventional mortgages increased in 2019, though the loans still have a relatively low market share. The top lender was a firm that focuses on loans for manufactured housing. (Includes two data charts.)

Delinquencies and loan modifications on non-agency mortgages increased in May, but at a slower rate than the sharp increase in April. Delinquencies are much higher on non-QMs than jumbos.

Lenders in the non-QM sector are working to get back to the way things were before the coronavirus. Sprout has resumed correspondent lending while a number of lenders have loosened underwriting standards.

Wells Fargo is maintaining its steady issuance of prime non-agency MBS while a pending deal from Neuberger Berman is much larger than the expanded-credit MBS the firm issued in May.

Under the proposal, some 147 smaller banks and credit unions won’t have to maintain an escrow account for higher-priced mortgage loans.

The proposal could eliminate GSE eligibility as a standard for a loan to be deemed a qualified mortgage. The regulator aims to level the playing field between the non-agency market and Fannie/Freddie.

Eleven expanded-credit MBS have been introduced since June 15, with a total unpaid principal balance of $3.4 billion.

A recent cash infusion will help MFA Financial revive its first ever non-QM MBS. The deal had been put on hold because of the pandemic.

Sales of non-QMs at distressed prices accounted for a large share of the nearly $65 million loss Impac took in the first quarter.