Prime non-agency MBS issuance continued to flow in April, helped by some new players. Expanded-credit activity has been limited recently, with a downturn in demand.

Non-agency originations of higher-priced mortgages declined by 35% on an annual basis in 2020. The higher-priced designation is a proxy federal regulators use for subprime mortgages. (Includes two data charts.)

An effort by the CFPB to delay the end of the QM patch is causing uncertainty for non-agency lenders. A coalition of lenders and consumer advocates said the CFPB shouldn’t move forward with the proposal.

The impairment rate on securitized non-QMs hit 11.1% at the end of February. At the end of 2020, the rate stood at 10.3% after months of steady improvement.

AIG is set to issue a jumbo MBS with new production and MFA Financial has a non-QM deal with loans that have seasoned for 16 months. A surge of issuance also looks likely later this month.

The margins on originating non-QMs look good enough for Impac to resume production. The lender suffered a large loss in 2020, partially due to pandemic-driven volatility in the sector.

Six prime non-agency MBS with newer loans have hit the market along with two expanded-credit deals with older mortgages.

Provident drops jumbos from warehouse securitization; The Change Company hires former Angelo Gordon MD; FoAM wins bid for Benji.

Originations of expanded-credit mortgages fell by nearly 30% on an annual basis in 2020 and the sector lost market share. But lenders in the sector believe production will gradually recover. (Includes data chart.)

Lenders can use the QM standards drafted in the waning days of the Trump administration. But there’s no certainty new leadership at the CFPB will leave them as they are.