Originations fell by 20% as the market was disrupted in March by the coronavirus. Most of the major lenders suspended production during the month, ending the quarter with declines. (Includes data chart.)

After issuance ground to a halt in March, five non-QM MBS deals came to the market in May and more are on the way. Transactions have been stocked with slightly seasoned mortgages.

Among the lenders currently offering non-QMs, underwriting standards are tighter and interest rates on the loans are higher than earlier in the year. Industry participants are optimistic that the sector will rebound, eventually.

A coalition of industry trade groups asked the SEC to revise standards for publicly registered non-agency MBS. They suggested aligning standards with practices for private placements.

Neuberger Berman issued a non-QM MBS this week, ending a lull in issuance that started in late February due to volatility from the coronavirus. Other issuers also plan to return to the market.

Angel Oak is originating non-QMs again and a handful of other shops plan to re-enter as well. However, some lenders continue to hold off.

The stall in issuance of non-QM MBS could be close to an end. Two firms plan to issue deals, though the exact timing isn’t clear.

Sprout Mortgage, the third-ranked expanded-credit lender in 2019, has restarted non-QM lending, but with tighter underwriting standards.

The types of mortgages included in expanded-credit MBS changed somewhat during the first quarter of 2020, even before COVID-19 hit. (Includes three data charts.)

Annaly’s investments in non-agency assets fell by 33% between the end of 2019 and March 31. The REIT sold some of its holdings and issued two non-agency MBS during the first quarter.