Angel Oak Mortgage suffered widening losses in the second quarter amid weak demand in the secondary market for non-QMs. Still, officials at the REIT suggest that things are looking up.
For the first time since May, a non-agency MBS with GSE-eligible mortgages for investment properties hit the market. And Change Lending switched products with its latest offering, focusing on mortgages with income verification. Overall, issuance remains slow.
Angel Oak Capital Advisors and a portfolio manager with the company settled with the SEC, which alleged improper reporting of delinquencies on a fix-and-flip securitization issued by Angel Oak in 2018.
There’s nowhere to hide for non-agency MBS issuers as quickly rising interest rates prompt losses. Loans the issuers are looking to sell have seen limited demand and lose value when retained even short-term.
While credit unions will be treated on par with banks, state housing finance agencies will be fully exempted from capital requirements imposed on those participating in the Ginnie MBS program.
The traditional leaders of contributions to expanded-credit MBS slowed their activity in the second quarter, with smaller entities filling some of the void. The types of loans going into MBS also shifted somewhat. (Includes three data charts.)
Redwood’s jumbo acquisition volume declined by more than 40% in the second quarter and the REIT took a loss on its residential activities. Officials at Redwood said the company is well-positioned moving forward.
Annaly is seeing strong returns from its aggregation and sales of non-agency mortgages even with weak demand in the secondary market. The REIT boosted its non-agency MBS issuance with plans for further growth.
MFA Financial took another loss in the second quarter as its holdings of non-QMs lost value and MBS with the loans was met with weak demand. The nonbank’s business-purpose lending unit also took a loss.