Originations of non-agency jumbo mortgages increased in the second quarter, spurred by low interest rates. The sector gained market share and some lenders said pipelines were strong heading into 3Q19.
Several real estate investment trusts, including MFA Financial and Starwood Property Trust, are expanding their portfolio of non-qualified mortgages. The loans provide attractive returns, whether retained or bundled into an MBS.
Annaly and Chimera are generating strong returns aggregating mortgages, issuing non-agency MBS and retaining subordinate tranches from the deals. Chimera plans to be a regular issuer of non-agency MBS with GSE-eligible loans.
Credit Suisse jumps into the non-QM MBS market, tapping a lender that previously contributed to MBS from Western Asset Management Company. JPMorgan Chase and PIMCO separately brought innovative deals.
Originations of non-QMs by Impac fell in the second quarter as the lender increased production of GSE refinances. However, officials at the nonbank stress that non-QMs remain an important part of Impac’s business.
Quicken increased its contributions to prime non-agency MBS this year, including $619 million of loans going into deals issued in the second quarter. Characteristics of the deals were largely unchanged.
Moody's proposes a new way of treating private MI for loans included in non-agency MBS; Angel Oak launches a pre-qualification tool; Sachem's earnings down in 2Q; more
Many applications for non-QMs don’t make it to closing due to documentation issues that could possibly have been easily addressed, according to an analysis by a due diligence provider.
The proposal to end the qualified mortgage patch available to loans eligible for sale to the GSEs could boost non-agency mortgage activity, though the devil is in the details as the plan plays out leading to early 2021.
Participants in the non-agency market are looking forward to expiration of the QM patch. However, industry groups and consumer advocates want the patch to be kept intact.
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