Performance on non-agency MBS has improved after the spike in late payments seen in the spring. However, borrowers who are still delinquent could prompt losses for investors.

Fed by massive originations of agency-eligible mortgages, the securitization rate rose 5.1 percentage points to 80.4% in the third quarter of 2020. That's the highest it's been since 2013. (Includes data chart.)

Three new non-agency MBS were introduced in the market recently. Two of the deals are backed by mortgages for investment properties.

As president, Joe Biden will have to negotiate with both sides of Congress, limiting sweeping policy changes, according to industry analysts.

Securitization of non-qualified mortgages is generating healthy profits. However, issuers face a dilemma: Originations of the product have slowed.

With a relatively high share of borrowers missing mortgage payments, investors in non-agency MBS are seeing reduced cash flows and, in some cases, losses. Though mortgage performance is improving, the outlook for investors remains uncertain.

Issuers of prime non-agency MBS are completing deals with mortgages originated after the market volatility of March while expanded-credit MBS continue to be stocked with older loans.

Prime jumbo MBS production posted the biggest increase of any sector, rising 177% from the second quarter, while ECM securitization was up 14% in the third quarter. (Includes three data charts.)

Sterling Bank has offered to buy back all non-QMs after uncovering various problems with its lending program. Between May and July, the bank repurchased loans from five MBS, taking a loss.