MFA Financial took another loss in the second quarter as its holdings of non-QMs lost value and MBS with the loans was met with weak demand. The nonbank’s business-purpose lending unit also took a loss.

After a nearly 30-day lull, MBS with prime jumbos hit the market. An offering from Chase was significantly smaller than the issuance from the firm in the past. A number of expanded-credit MBS are also on offer.

Western Asset Management Company considering a sale of its non-agency REIT; Velocity offers another small-balance commercial MBS; PennyMac ramping up jumbo originations.

Non-agency lenders looking to sell mortgages with lower interest rates only have whole-loan sales as an outlet as MBS investors wait for new originations.

Sprout originated about half of the loans in a new $293.5 million expanded-credit MBS from an affiliate of Lone Star Funds. Fitch Ratings assessed the deal and suggested that risks tied to Sprout were limited.

Non-QMs are a double-edged sword for lenders, offering attractive margins along with extreme volatility risk. Industry analysts suggest demand for the loans in the secondary market will recover when lenders start selling mortgages with higher interest rates.

Expanded-credit MBS have been few and far between in July while non-agency MBS issuers have yet to offer a prime deal during the month.

Two prominent non-QM lenders ceased operations in the past two weeks amid weak demand for the loans. Still, other market participants are stressing that they remain in strong operating positions.

Shortly after lenders adjusted to QM standards set in December 2020, the CFPB is initiating a review of the standards. Significant changes appear unlikely, though the seasoned QM option could be eliminated.

PRP Advisors issued its first non-agency MBS with newly originated mortgages for investment properties. To this point, Balbec’s non-agency MBS issuance has focused on seasoned mortgages.