The nonbank mortgage sector appeared to be whistling by the graveyard earlier this week because of liquidity concerns sparked by the pandemic. For now, crisis has been averted but the situation is fluid.
The bulk of lenders operating in the non-QM market have suspended production due to a lack of demand in the secondary market. There are some signs that originations could resume within weeks.
Fannie Mae reported ”fair value losses” of $2.2 billion for 2019. That’s compared to a $1.1 billion gain in 2018, and a $1.2 billion loss in 2017. Volatility in the company’s income reflects its hedging operations.
Ginnie Mae will meet with nine of its top nonbank issuers to discuss counter-party risk and how they plan to address capital and liquidity issues as part of its continuing surveillance of nonbanks’ financial health.