Redwood locked $2.1 billion of jumbos during the third quarter though it only acquired $176 million. The REIT is issuing MBS and selling loans to banks.
Some $1.64 billion of expanded-credit MBS and $1.06 billion of prime non-agency MBS hit the market in the past two weeks. The expanded-credit deals were stocked with older loans.
With a relatively high share of borrowers missing mortgage payments, investors in non-agency MBS are seeing reduced cash flows and, in some cases, losses. Though mortgage performance is improving, the outlook for investors remains uncertain.