Two Harbors and Front Yard recently terminated their partnerships with their respective external managers. However, Two Harbors’ refusal to pay a termination fee has landed the REIT in court.
Losses on non-agency MBS, a rarity for deals issued since 2010, look likely as forbearance plans for distressed borrowers end. Investors in the senior tranches appear to be safe for now.
Issuance of expanded-credit MBS was expected to remain suppressed after volatility in March halted activity. After a strong second quarter, industry analysts revised their projections.