Participants in the non-agency market note that the loans are more difficult to underwrite than typical agency mortgages. But given that agency refi business is falling, there’s still plenty of business to be had in the non-agency space.
Non-agency originations of higher-priced mortgages increased by nearly 60% on an annual basis in 2021. The top lenders include a mix of expanded-credit producers and lenders that focus on manufactured homes. (Includes two data charts.)
Homeowners have plenty of equity and nonbank lenders are looking to replace refinance business, leading some large nonbanks to start offering HELOCs. One complication: what to do with the assets.
Impac increased its emphasis on non-QM lending in the first quarter of 2022 and ended up taking a loss. Officials at the nonbank said hedging and other activities couldn’t overcome volatility in the non-QM market.
Altisource setting up alternative lending operations; Reverse Mortgage Funding offers non-agency MBS with proprietary reverse mortgages; Dovenmuehle assessed as “above average” by Moody’s.
After a two-week lull in issuance of jumbo MBS, a handful of deals hit the market. MBS issuers are facing weak demand from investors, with whole-loan outlets often offering better pricing.
Investors are showing little demand for new issuance of CLOs and trading in the secondary market. CLOs are being sold off and are meeting with few potential buyer options.