Several real estate investment trusts, including MFA Financial and Starwood Property Trust, are expanding their portfolio of non-qualified mortgages. The loans provide attractive returns, whether retained or bundled into an MBS.
Annaly and Chimera are generating strong returns aggregating mortgages, issuing non-agency MBS and retaining subordinate tranches from the deals. Chimera plans to be a regular issuer of non-agency MBS with GSE-eligible loans.
Originations of non-QMs by Impac fell in the second quarter as the lender increased production of GSE refinances. However, officials at the nonbank stress that non-QMs remain an important part of Impac’s business.
Quicken increased its contributions to prime non-agency MBS this year, including $619 million of loans going into deals issued in the second quarter. Characteristics of the deals were largely unchanged.
Noting strong demand for non-agency MBS, issuers are getting creative with the types of loans they package into deals. JPMorgan, Credit Suisse, Angelo Gordon and Goldman Sachs are all entering new sectors.