Issuance of prime non-agency MBS increased by more than 20% during the third quarter of 2026 while expanded-credit MBS held steady. (Includes data file.)

Many expanded-credit MBS are performing better than Fitch Ratings’ initial expectations. The rating service also completed a review of ratings on jumbo MBS, resulting in more limited upgrade activity.

Debt service coverage ratios are moving close to 1.0 but performance remains strong due to tight underwriting of borrowers.

New ratings methodology and additional historical data on home equity investments should boost investor demand for the product in 2025.

Genesis Capital has issued more than $1 billion in rated residential transition loan securitizations since Morningstar DBRS started rating the securitizations in March.

Morningstar DBRS created rating criteria for securitizations of home equity investments in mid-2023. Since then, issuance has blossomed, and the sky’s the limit, according to industry participants.

The housing environment and new rating methodology have led to an improving securitization market for business purpose loans.

Home price appreciation and increased borrower pay-downs led to upgrades for a handful of MBS backed by home equity loans.

Rithm Capital closed a $500.0 million MBS backed by rated residential transition loans through its Genesis Capital shelf. The deal is the second RTL securitization to receive a rating from Morningstar DBRS.

Despite growing delinquencies, Morningstar DBRS has provided a stable outlook for the securitization markets involving non-QM loans and HEI agreements.