After a nearly 30-day lull, MBS with prime jumbos hit the market. An offering from Chase was significantly smaller than the issuance from the firm in the past. A number of expanded-credit MBS are also on offer.

Dwindling refis and record levels of home equity are making home-equity products attractive for nonbanks. The challenge is competing with banks that have the capacity to hold HELOCs and the like in portfolio.

Radian is following Arch among private mortgage insurers launching non-agency conduits. Officials at Radian note that its experience with private MI will help with acquisitions and sales of non-agency mortgages.

Western Asset Management Company considering a sale of its non-agency REIT; Velocity offers another small-balance commercial MBS; PennyMac ramping up jumbo originations.

Non-agency lenders looking to sell mortgages with lower interest rates only have whole-loan sales as an outlet as MBS investors wait for new originations.

First Republic increased its originations for the second consecutive quarter thanks to a focus on jumbos. The bank puts an emphasis on customer service and benefits from having a portfolio to hold mortgages.

Sprout originated about half of the loans in a new $293.5 million expanded-credit MBS from an affiliate of Lone Star Funds. Fitch Ratings assessed the deal and suggested that risks tied to Sprout were limited.

Non-QMs are a double-edged sword for lenders, offering attractive margins along with extreme volatility risk. Industry analysts suggest demand for the loans in the secondary market will recover when lenders start selling mortgages with higher interest rates.

Expanded-credit MBS have been few and far between in July while non-agency MBS issuers have yet to offer a prime deal during the month.

Since December, interest rates have increased on both non-agency jumbos and conventional-conforming mortgages. But rates have increased by a lower amount on jumbos thanks to demand for the loans at banks.