In the past two weeks, $2.74 billion of non-agency MBS were gobbled up by investors. GSE-eligible mortgages for non-owner-occupied properties accounted for half of the dollar volume in the deals.

Thanks to restrictions placed on the GSEs, investment-property mortgages are flowing into non-agency MBS. Some lenders are issuing deals on their own while others are turning to aggregators like Credit Suisse.

The recently public real estate investment trust focuses nearly all of its investments on non-QMs originated by affiliated lenders.

Angelo Gordon Mortgage Investment Trust expects returns as high as 18% from securitizing non-QMs. The REIT and others are working to increase their acquisitions of the loans.

The three servicers added significant volume to their portfolios thanks to the surge in non-agency MBS issuance during the second quarter of 2021. The performance of securitized loans also continues to improve. (Includes data chart.)

The offerings in the non-agency MBS market range from deals backed by prime jumbo mortgages to investment-property loans that were eligible for sale to the GSEs to non-QMs.

With new restrictions on GSE sales, lenders are increasingly turning to the non-agency MBS market to sell mortgages for investment properties. Issuers include new and established participants.

It’s easier for banks to complete buyouts of mortgages from Ginnie MBS than nonbanks due to banks’ funding advantages. Nonbanks are also increasingly modifying mortgages rather than offering partial claims. 

Flagstar Bank shot to the top of the list of originators of expanded-credit mortgages securitized in the second quarter of 2021, with two non-agency MBS stocked with GSE-eligible loans for investment properties. (Includes three data charts.)

Chase was the most active player in the non-agency MBS market in late July, with deals involving jumbos, investment-property mortgages and a risk-sharing transaction.