The market for MBS with non-qualified mortgages is growing by leaps and bounds. However, there is some skepticism about whether there’s enough demand to support $50 billion in annual issuance.
Deal volumes in the non-agency MBS market are elevated as issuers work to meet investor demand. Angel Oak, Chase and Invictus are bringing large deals and more issuance is in the pipeline.
Professionals familiar with the product say investment-property loans underwritten using debt service coverage ratios are easier to underwrite than mortgages made to self-employed borrowers using bank statements...
Some lenders that were looking to throw in the towel after a rough first quarter experienced strong originations and returned to profitability as interest rates fell, putting the brakes on M&A activity.
The banks are testing an incentive payment mortgage servicing compensation structure for certain non-agency deals. The move aims to align expenses and revenues for servicers faced with delinquent loans.
Originations are increasing, demand in the secondary market is strong and the interest rate premium on non-QMs is declining, helping to prompt more lending volume.