“It has been clear to us for some time that the market has a need for products like this," said Two Harbors executive William Roth.

Some investors have pointed out that Ocwen’s origination volume is small compared to its MSRs and that historically the company has never been competitive in the origination market.

Total non-agency MBS held by banks and thrifts in the second quarter of 2014 fell 9.5 percent compared to 2Q13, largely driven by runoff.

Redwood insists the company prefers to issue jumbo MBS rather than sell whole loans, but the current pricing is just too good to pass up.

Apollo's Commaroto said the REIT is bidding on loans, but is still considering whether to acquire non-QMs that way or partner with a lender to receive a more steady flow of product.

Meanwhile, Redwood posted $45.0 million of net income in the third quarter of 2014, almost triple of what it earned in 2Q.

Jaron Van Maanen of the FDIC said the lender should determine if the factor determining the LO’s comp consistently varies with terms over a significant number of transactions...

PennyMac’s MSR portfolio is almost evenly divided between subservicing for others, the company’s own originations, and mortgage servicing rights acquired from others.

Two Harbors has plenty of capacity to hold non-agency loans in portfolio without reliance on outside financing.

Some 60.7 percent of the mortgages in the deal have interest-only features.