The supply of mortgages for non-agency MBS is expected to decline, leading to concerns that industry participants might loosen underwriting standards to prop up volumes.
AGMIT sold off the last of its investments in commercial mortgages in September, with plans to increase investments in non-QMs and other non-agency mortgages.
The share of securitized non-QMs that are delinquent or modified increased in August for the first time since February. Still, industry analysts are comfortable with the long-term outlook for performance.
The switch in QM standards that many lenders had to make in July didn’t have a major impact on spreads between interest rates on mortgages and the average prime offer rate. Most mortgages continue to receive safe harbor QM status.
Underwriting based on debt service coverage ratios is on the rise. The loans differ from GSE-eligible mortgages in that underwriting is based on income generated by the property rather than looking to the borrower’s DTI ratio.
Lenders can’t keep up with the demand for non-QMs from investors in the secondary market. Originations are expected to grow when the agency refi wave crashes.
Rocket’s $968.4 million jumbo MBS is one of the largest from a nonbank post 2010. And after years of contributing non-QMs to MBS issued by others, AmWest is going to issue its own deal.
The expanded-credit sector is finally bouncing back from the disruptions faced for much of 2020. Originations in the second quarter of 2021 were close to pre-pandemic levels. (Includes data chart.)
Among a group of 15 servicers tracked by this publication, nonprime servicing balances were essentially unchanged between March and June. At the servicer level, there were some fluctuations. (Includes data chart.)
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