After more than a year of steady declines in delinquencies on securitized non-QMs, delinquency rates have fluctuated in recent months.

The expanded-credit market was the only sector to see originations increase in the first quarter. The products accounted for 2.2% of total mortgage originations. (Includes data chart.)

Participants in the non-agency market note that the loans are more difficult to underwrite than typical agency mortgages. But given that agency refi business is falling, there’s still plenty of business to be had in the non-agency space.

Non-agency originations of higher-priced mortgages increased by nearly 60% on an annual basis in 2021. The top lenders include a mix of expanded-credit producers and lenders that focus on manufactured homes. (Includes two data charts.)

Impac increased its emphasis on non-QM lending in the first quarter of 2022 and ended up taking a loss. Officials at the nonbank said hedging and other activities couldn’t overcome volatility in the non-QM market.

A handful of real estate investment trusts acquired non-QMs at a discount as interest rates increased during the first quarter. Lenders selling the loans took some losses but appear to have weathered the storm.

MFA Financial took a large loss in the first quarter as rising interest rates reduced the value of non-QMs on the REIT’s balance sheet. Lima One, a business-purpose lender now owned by MFA, was a bright spot.

Barclays sourced many of the mortgages in the MBS from Invigorate Finance, an aggregator founded in March 2021.

Originations at Velocity Financial increased in the first quarter despite an increase in interest rates. The lender’s income declined, though much of the drift was tied to a refi of corporate debt that could be beneficial in the long term.

The exchange that connects lenders with non-agency investors will facilitate sales of debt service coverage ratio loans for investment properties.