Non-agency mortgages for investment properties are increasing thanks to volatility in GSE pricing and lenient underwriting standards. Volume could take a hit as interest rates increase.
Among a group of 21 prominent banks that have reported earnings for the fourth quarter, nearly every institution took a hit on mortgage earnings. For many, originations declined along with margins.
Potential first-time homebuyers are facing affordability issues due to elevated home price appreciation. And though home price appreciation is slowing, interest rates are set to rise.
Financial technology lender SoFi is set to acquire a bank; United Wholesale Mortgage will cover appraisal costs on purchase mortgages through the end of March; mortgage tech companies raise capital; CoreLogic offers new fraud-detection service; low-code marketplace launched.
Non-agency MBS on offer in recent weeks include deals backed solely by mortgages originated by a Community Development Financial Institution, non-agency mortgages for investment properties and proprietary reverse mortgages.
Four firms are currently offering whole-business ABS. Two of the deals received ratings from both KBRA and S&P, though the rating services differed in their assessments.
Margin requirements for trading GSE MBS are on the way; the Fed will end its stimulus-related purchases of agency MBS in March; JPM readies its largest jumbo MBS since 2016.
Loan originators hurting for business as GSE refis decline should consider non-QMs, according to industry participants. Some major lenders are expecting non-agency lending to jump this year.