The supply of mortgages for non-agency MBS is expected to decline, leading to concerns that industry participants might loosen underwriting standards to prop up volumes.
PennyMac and United Wholesale Mortgage hiked their loan limits for GSE mortgages well before the FHFA is scheduled to announce the official limits for 2022. The move will limit some of the flow of mortgages into the non-agency jumbo market.
AGMIT sold off the last of its investments in commercial mortgages in September, with plans to increase investments in non-QMs and other non-agency mortgages.
The share of securitized non-QMs that are delinquent or modified increased in August for the first time since February. Still, industry analysts are comfortable with the long-term outlook for performance.
The switch in QM standards that many lenders had to make in July didn’t have a major impact on spreads between interest rates on mortgages and the average prime offer rate. Most mortgages continue to receive safe harbor QM status.
FHFA scraps plan to allow non-agency mortgages on common securitization platform; non-agency forbearance declines; Redwood makes another venture investment; Plaza resumes non-QM program; FoA allowing jumbo borrowers to use income from ADUs; Invictus hires dv01.
Attendance was down at the recent Structured Finance Association convention in Las Vegas. Discussions touched on the non-agency MBS market and the GSEs, among other issues.
The difference between interest rates on non-QMs in MBS and the interest rate paid to investors in the securities is helping to protect investors from losses. Excess spread in the sector increased as seasoned loans were repackaged.