With lending volumes expected to increase, numerous non-QM lenders are working to add employees. New products are also being offered.

The "patch" that provided QM status to every mortgage eligible for sale to the GSEs is no longer in effect. With fewer incentives to originate mortgages that comply with GSE standards, lenders could boost non-agency originations.

Toorak Capital Partners expanded its securitization activities into 30-year mortgages for investment properties. Bayview Asset Management and Goldman Sachs have jumbo MBS in the market, and a number of other issuers are planning deals.

The impairment rate on securitized non-QMs fell to 7.9% at the end of May. Prepayments in the sector remain elevated as borrowers refinance.

As interest rates declined in 2020, the ARM share of jumbo originations plummeted. Lenders also got more lenient with DTI ratios, while average credit scores and LTV ratios tightened somewhat.

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After focusing on securitization of residential bridge loans, Toorak Capital Partners is preparing an MBS backed by investment-property loans with 30-year terms.

The $224 million MBS is stocked with 30-year mortgages underwritten based on debt-service coverage ratios.

Home prices are increasing at levels last seen in 2005. A growing share of mortgage originations are shifting to the jumbo market and cash-out refis.

While jumbo lock volume declined, Redwood increased its expanded-credit mortgage activity.