At one point, First Republic Bank was a major contributor to non-agency MBS. In recent years, the bank retained its production, though JPMorgan Chase could move to sell the loans.
Issuance of all the major RMBS products rose significantly in the first quarter of 2023, although average seasoning in the deals was higher. Subordination levels in ECM deals rose as investor demand weakened and collateral trended riskier. (Includes three data charts.)
Prime jumbos are unlikely to account for the majority of non-agency MBS issued this year, a first for the products since the time before the financial crisis. Non-QM MBS issuance is holding up better and second-lien securitizations are building some momentum.
AB CarVal Investors and Ares Management are in the market with separate expanded-credit MBS, marking the first time either firm has offered that type of MBS.
Redwood Trust isn’t planning to ramp up acquisitions and sales of prime non-agency mortgages in the near term due to elevated interest rates and strong competition from banks for jumbos.
Prices on non-agency MBS took such a hit in 2022 that the market is now gaining popularity with investors, even with the threat of a recession. Still, new issuance in 2023 is expected to come in lower on an annual basis.
KBRA said that third-quarter MBS issuance volume didn’t meet its expectations and will drop rapidly in the coming year. Meanwhile, both DBRS and Moody’s noted that performance is stabilizing.
Community development financial institutions are exempt from some ability-to-repay rules and can provide up to 40% of their financial services to customers outside their targeted underserved community.
The creation of a U.S. sovereign wealth fund could grease the skids for an end to the conservatorships of Fannie Mae and Freddie Mac.
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