Issuance of MBS backed by fix-and-flip loans is outpacing that of last year, though the market remains small. The largest issuer in the space received a significant investment from KKR.
The company is set to issue the first post-crisis non-agency MBS stocked entirely with home-equity lines of credit. Fitch assigned preliminary AAA ratings to the deal.
Five expanded-credit MBS deals are due at the end of the second quarter. The issuers are Ellington Financial, New Residential, Seer Capital Management and affiliates of Caliber Home and Starwood Property.
An affiliate of Angelo Gordon is set to issue its first non-QM MBS with what could be a trend-setter: many of the loans were originated by a CDFI. Such loans are exempt from the ATR and risk-retention standards.
The latest expanded-credit MBS from Angel Oak will be somewhat smaller than the first two deals the firm issued this year. The deal also includes a higher share of mortgages underwritten with 12 months of bank statements.
Fix-and-flip loans are offering attractive returns to some non-agency players even as others are reducing their exposure to the market, citing concerns about slowing home-price appreciation.
Fitch has proposed adjustments to its non-agency MBS rating criteria that would levy penalties related to natural disaster risk. The impact of the proposal will largely be offset by other adjustments, according to the rating service.
The creation of a U.S. sovereign wealth fund could grease the skids for an end to the conservatorships of Fannie Mae and Freddie Mac.
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