Close to $15 billion of GSE-eligible mortgages have gone into non-agency MBS this year, including many loans for investment properties and second homes. That’s expected to slow due to a removal of restrictions on the GSEs.

Some non-agency lenders are using the newer QM standards, which allow more loans to receive QM status. Others are waiting to see if the CFPB will alter the provisions.

Redwood’s already generating record volume in its lending/aggregation business, with plans to increase activity and expand its footprint. The firm might also eventually drop its real estate investment trust status.

Sector-wide, bank and thrift holdings of first-lien mortgages declined by 1.4% during the second quarter. Among three big banks, trends varied.

Underwriting based on debt service coverage ratios is on the rise. The loans differ from GSE-eligible mortgages in that underwriting is based on income generated by the property rather than looking to the borrower’s DTI ratio.

Lenders can’t keep up with the demand for non-QMs from investors in the secondary market. Originations are expected to grow when the agency refi wave crashes.

Rocket’s $968.4 million jumbo MBS is one of the largest from a nonbank post 2010. And after years of contributing non-QMs to MBS issued by others, AmWest is going to issue its own deal.

CoreVest issued a securitization involving bridge loans for residential properties; a prime non-agency MBS issued by JPMorgan Chase in 2018 is on watch for a downgrade.

The definitions used by non-agency MBS lenders and issuers aren’t consistent and many terms haven’t been updated since 2009. The MISMO and the SFA are separately working on setting new standards.

The Fed could end its stimulus-related purchases of agency MBS by the middle of 2022; S&P official provides an example of just how conservative rating services can be when assessing non-agency MBS and ABS.