The CFPB is considering eliminating the DTI ratio metric when determining the QM status of a mortgage and instead basing the designation on the interest rate. The proposal was met with mixed reactions.
At least eight expanded-credit MBS rated by DBRS Morningstar suffered losses in the second half of 2019. Investors, though, were protected due to high credit enhancement levels.
After a lull in December, issuers are bringing non-agency MBS to the market. Redwood Trust is planning a deal with seasoned mortgages while New Residential has an expanded-credit MBS.
Expanded-credit MBS issuance looks likely to increase again in 2020, but not at the exponential growth rate seen since the sector emerged in 2015. A major variable is how the CFPB will address the QM patch.