The regulator is seeking input on how to help borrowers benefit when interest rates decline. Options include revising documentation requirements for streamlined refis and policy changes to spur product innovation.
Non-QM impairments decline after two-month increase; Balbec unit offers non-QM MBS with loans from Sprout; new CIO at Redwood; Velocity quickly packages business-purpose loans.
Spreads had steadily widened in the expanded-credit sector between February and July. But as spreads declined in August, demand for expanded-credit MBS appears to have improved.
Newfi is offering a non-QM where the interest rate incrementally steps up annually for five years then remains fixed. Meanwhile, Milo launched a cash-out crypto mortgage, where borrowers pledge cryptocurrency in exchange for a loan as large as $5.0 million.
The expanded-credit mortgage sector bucked the trend and increased production in the second quarter. While some lenders significantly boosted originations, others recorded sharp declines. (Includes data chart.)
Less-capitalized non-QM lenders struggled amid weak demand for the loans in the secondary market. Some firms are looking to take advantage of that weakness.
Non-QM lenders are regaining their footing as volatility in the secondary market recedes. And many potential non-QM borrowers are comfortable paying relatively high interest rates, helping to boost originations.
Impairments, which reflect delinquencies and modifications, increased on securitized non-QMs for a second consecutive month. In July, the performance of severely distressed borrowers also worsened.
The non-agency market hasn’t lived up to the hype, according to Mat Ishbia of United Wholesale Mortgage, which saw a drop in non-agency lending. The overall sector, meanwhile, saw higher production and gained market share in the second quarter.
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