Bank and thrift first-lien holdings declined by 1.2% at the end of 2020, marking the first quarterly drop since the first quarter of 2017. The three largest banks reduced their holdings in the fourth quarter. (Includes data chart.)
A number of lenders have introduced new non-agency products with looser underwriting guidelines in recent weeks. Rocket and United Wholesale offered jumbos and Deephaven widened expanded-credit products.
Prepayments helped pay down senior bonds, making the remaining subordinated tranches the larger share of an expanded-credit deal’s balance. Result: A larger cushion against potential losses, DBRS said.