Originations at the bank were essentially flat in the second quarter while margins dropped.

After three months of declines, mortgages delinquencies increased in June.

Issuance of prime non-agency MBS fell sharply in the second quarter of 2022 as rising interest rates limited investor demand for the securities. Nonbanks remained the main source of prime mortgages. (Includes three data charts.)

Non-agency lenders looking to sell mortgages with lower interest rates only have whole-loan sales as an outlet as MBS investors wait for new originations.

First Republic increased its originations for the second consecutive quarter thanks to a focus on jumbos. The bank puts an emphasis on customer service and benefits from having a portfolio to hold mortgages.

Sprout originated about half of the loans in a new $293.5 million expanded-credit MBS from an affiliate of Lone Star Funds. Fitch Ratings assessed the deal and suggested that risks tied to Sprout were limited.

Non-QMs are a double-edged sword for lenders, offering attractive margins along with extreme volatility risk. Industry analysts suggest demand for the loans in the secondary market will recover when lenders start selling mortgages with higher interest rates.

Expanded-credit MBS have been few and far between in July while non-agency MBS issuers have yet to offer a prime deal during the month.

Since December, interest rates have increased on both non-agency jumbos and conventional-conforming mortgages. But rates have increased by a lower amount on jumbos thanks to demand for the loans at banks.

Fitch corrects improper upgrade to non-agency credit-risk transfer transaction; RMF offers MBS with proprietary reverse mortgages; update on crypto mortgages; LoanScorecard broadens availability of bank statement analyzer.