Cardinal Capital Group and Ellington Financial separately issued their first residential transition loan securitizations.

Short-term mortgages track residential transition loans and fix-and-flip loans. Last year, originations were up 34.6% compared with 2023. (Includes data table.)

Michael Fratantoni, chief economist and senior vice president of research and industry technology at the Mortgage Bankers Association, forecast a growth in new construction loans in the coming year.

One in 12 home sales in the first quarter of 2024 was a flipped home, but only one-third of flippers used financing.

The housing environment and new rating methodology have led to an improving securitization market for business purpose loans.

Rithm Capital closed a $500.0 million MBS backed by rated residential transition loans through its Genesis Capital shelf. The deal is the second RTL securitization to receive a rating from Morningstar DBRS.

Ellington Financial, MFA Financial and AG Mortgage Investment Trust boosted net income in the fourth quarter and expect to see strong performance this year.

Ratings for MBS with residential transition loans are helping to increase investor demand.

Morningstar DBRS assigned a preliminary A rating to the deal that includes 370 short-term loans with a principal balance of $158.4 million.

Expanded-credit securitization is heating up and prime non-agency MBS issuers are also active.