Two securitizations brought to the market in May were stocked with recently originated non-qualified mortgages as issuers continue to plow their way through the remainder of the pandemic.
As much as $20 billion of GSE-eligible mortgages could go into non-agency MBS annually due to new restrictions on GSE acquisitions of mortgages for investment properties and second homes.
It marks the first residential MBS rated by Kroll that aligns with a social bond framework. Fitch Ratings also rated the deal, though the firm appeared to be somewhat less impressed.
Issuers of expanded-credit MBS haven’t been able to stock deals with new production while one of the largest post-2010 prime non-agency MBS hit the market this week.
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.
There’s little uniformity in how non-agency MBS issued before 2018 will address the end of LIBOR. The majority of deals will switch to a fixed rate, while others allow for an alternative reference rate.
Demand for non-QM MBS has returned to pre-pandemic levels even though the deals include a significant amount of loans in forbearance and fewer protections for investors.
Following in the footsteps of Citi and JPMorgan Chase, Wells Fargo is preparing to issue a non-qualified mortgage MBS. The bank plans to securitize small pools of its non-agency originations on a regular basis.
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