The Indiana-based bank reported a sharp drop in net income in the second quarter tied to multifamily mortgages involved in suspected fraud.

Expanded-credit MBS issuance with loans to self-employed borrowers increased by 45.3% during the second quarter.

Redwood took a net loss of $98.5 million in the second quarter of the year, largely tied to a shift away from its legacy portfolio.

“We’ve been very proactive in seeing the housing market decelerate and trying to be on our front foot,” said Mike Fania, co-chief investment officer and head of residential credit at Annaly.

The bank's president said, "Our pipelines remain full, so we expect to continue to see loan growth."

Expanded-credit MBS issuance rose by 25.4% from the first quarter to the second quarter, with mortgages for self-employed borrowers, interest-only loans and refinances driving the increase. (Includes three data tables.)

The shift comes amid a slowdown in home price appreciation. Officials at the REIT said aggregation volume remains steady.

As whispers of mortgage fraud are hitting Baltimore and surrounding markets, some lenders are acting with caution.

PennyMac continues to push ahead with non-agency MBS issuance despite volatility during the second quarter.

In a rare move for a bank, the majority of Royal Business Bank’s mortgages are non-QMs. The bank is headquartered in Los Angeles and operates across six states.