Higher interest rates took a bite out of Angel Oak Mortgage’s profits in the fourth quarter, but its non-QM originations continue to remain strong. The firm also plans to maintain regular issuance of MBS.
Six expanded-credit MBS hit the market in the past two weeks, including the largest deal since COVID upended the sector. Activity is much slower in the space for prime jumbos and GSE-eligible investment-property loans.
Most companies that issued non-agency MBS with GSE-eligible investment-property loans during the fourth quarter haven’t offered similar deals thus far in 2022.
Spreads on MBS involving non-qualified mortgages have widened due to rising interest rates and excess supply. However, demand is on the rise again as new buyers are entering the space.
The Structured Finance Association is seeking input from its members as it works to develop consistent disclosure frameworks for MBS and ABS that highlight their environmental, social and governance features.
The performance of MBS and ABS isn’t expected to be directly impacted by the fallout of Russia’s invasion of Ukraine in the near term; prepayment rates on agency MBS declined in February.
AG Mortgage Investment Trust acquired $2.5 billion of non-agency loans last year, about half of them during the fourth quarter. The REIT is targeting returns of around 15% from non-agency MBS issuance.
Goldman Sachs is set to issue its first expanded-credit MBS, with four other firms also offering deals in the past two weeks. In the prime non-agency space, JPMorgan Chase has another large offering.