After the transaction closes, business-purpose lending investments will account for more than 15% of Redwood's investment portfolio, up from a 4% share.
The new MBS differs in some ways from previous expanded-credit issuance from Annaly, including a reduced reliance on mortgages from Banc of California and an increase in investment-property loans.
Issuance of expanded-credit MBS more than doubled on an annual basis at the end of the third quarter while deals backed by prime mortgages and GSE-eligible loans declined. The expanded-credit sector is expected to continue to grow, according to industry analysts. (Includes data chart.)
JPMorgan Chase Bank has created a synthetic credit-linked note to transfer credit risk on a pool of jumbo mortgages. Unlike traditional MBS, loans in the transaction will remain on the bank’s balance sheet.
Originations of higher-priced non-government mortgages increased by 11% in 2018. The loans can’t receive safe harbor QM status and many higher-priced mortgages are required to include escrow accounts. (Includes two data charts.)
Issuance of non-agency MBS slowed near the end of the third quarter but presale reports for a number of deals have been published this month and more securities are on the way.
Originations of reverse mortgages are dominated by FHA loans. However, there’s a loan limit on FHA loans, allowing Reverse Mortgage Funding and other lenders to develop a market for proprietary products.