MBS and ABS participants gathered in Las Vegas this week, discussing volatility and weak demand from investors. The consensus? Buyers will remain cautious until getting a better handle on the Fed’s actions.
Angel Oak Director Robert McDonough noted the difficulties in pricing climate risks into securities. However, once investors can more actively analyze risks, residential MBS loan pools are likely to change, he said.
Spreads on various types of residential MBS are wider than they were during the early days of the pandemic, suggesting that the assets aren’t particularly attractive to investors. However, that isn’t necessarily true.
The REIT has built up strong residential and MSR businesses to diversify risk and support its agency prowess. And while it’s held back on increasing leverage, once volatility declines, all that may change.
Non-QM rates are now north of 7% in many cases, but the market is still dealing with upwards of $5 billion in lower-coupon product that needs to be moved.
After a two-week lull in issuance of jumbo MBS, a handful of deals hit the market. MBS issuers are facing weak demand from investors, with whole-loan outlets often offering better pricing.
While investors in fix-and-flip and other business-purpose loans are taking a closer look at loan characteristics and lenders’ practices, lenders are adjusting and considering locking in longer-term financing.
Is Onity Group eyeing a sale? Perhaps. And why not? Servicing values are approaching a 25-year high.
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