The latest MBS from Blackstone includes non-agency mortgages for investment properties from various lenders. The firm’s pre-pandemic non-agency MBS were backed by loans from Finance of America.
UWM has its own non-agency MBS shelf, allowing the lender/servicer to directly issue deals. However, the company continues to contribute mortgages to non-agency MBS issued by others.
Nearly $4.0 billion of non-agency MBS with mortgages for investment properties was on offer in the past two weeks. Many of the deals are backed by GSE-eligible mortgages.
Spreads on jumbo MBS widened in recent months as the supply of prime non-agency MBS surged. Redwood Trust opted for more whole-loan sales during the third quarter while JPMorgan Chase remained an active MBS issuer.
While caps on GSE acquisitions of loans for investment properties were suspended mid-September, non-agency issuers continue to package the loans in their MBS. Three firms entered the sector during October.
The difference between interest rates on non-QMs in MBS and the interest rate paid to investors in the securities is helping to protect investors from losses. Excess spread in the sector increased as seasoned loans were repackaged.
A handful of MBS and ABS have incorporated blockchain in a limited fashion. Proponents of the technology suggest that it will improve efficiencies and decrease costs.
Changes to underwriting standards and home price appreciation helped investors in non-agency MBS largely avoid losses during the pandemic. By comparison, cumulative losses on subprime MBS during the financial crisis of 2008 hit nearly 20%.
Issuers are still stocking non-agency MBS with GSE-eligible mortgages for investment properties. Lenders and issuers are considering their options following a suspension of limitations placed on the GSEs.
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