The first non-agency MBS issued by a Community Development Financial Institution includes loans that didn’t require verification of borrower income or employment.
Mortgages in the transaction were acquired by Western Alliance Bank on a correspondent basis and will remain on its balance sheet. Risk-sharing deals in the non-agency market are rare and largely involve megabanks.
Prospects for non-agency MBS issuance in 2022 look mixed, with expanded-credit activity expected to increase while volume involving non-agency jumbos and GSE-eligible loans could decline.
Western Asset Mortgage Capital plans to shed investments in commercial mortgages and shift to residential assets, including non-QMs. The REIT was taking losses on commercial investments.
In a familiar refrain, participants in the non-QM market suggest the sector is ready for takeoff. Still, technology in the non-QM market lags compared with the GSEs.
Expanded-credit mortgages gained market share as total first-lien originations declined in the third quarter. Still, the sector accounted for only 1.1% of the total origination pie. (Includes data chart.)
Non-agency MBS brought to the market in the past two weeks were primarily stocked with jumbo mortgages and GSE-eligible loans for investment properties. There were also a few expanded-credit deals.
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