Another non-agency player assuming a defensive position is Rithm Capital. The firm has cut loan-to-value ratios and tightened underwriting.

The REIT believes the best opportunities are in business-purpose lending. But higher rates and tighter underwriting will slow originations.

The losses were driven by negative asset marks and impairment of assets related to its soon-to-be-shut mortgage originations business.

It’s been a tough year for non-QM shops as lenders adjust to a new rate-driven reality. Company closings appear to be picking up, but some believe the worst of it might be over. The latest to cease originations: Athas.

Demand for non-QMs in the secondary market remains weak. Investors are concerned about the prepayment profile of the loans, among other issues.

Activity at the GSEs is moving away from areas where the non-agency market could compete with Fannie Mae and Freddie Mac. Cash-out refi business could be the next category to take a hit as FHFA has directed the GSEs to increase upfront pricing. (Includes data chart.)

First Republic Bank isn’t increasing its interest rates for jumbo mortgages at the same pace that the Fed is increasing interest rates, leading to lower margins for the bank.

Annaly was the top issuer of non-agency MBS in the third quarter. The REIT had to retain more of its issuance than usual due to weak investor demand.

Redwood acquisitions of jumbo mortgages declined by more than 70% on a sequential basis in the third quarter. Officials at the REIT suggested that Redwood will continue to limit loan acquisitions until market dynamics improve.

Only one deal hit the market in the past two weeks and the issuance pipeline isn’t looking particularly strong.