Delinquencies and loan modifications on non-agency mortgages increased in May, but at a slower rate than the sharp increase in April. Delinquencies are much higher on non-QMs than jumbos.
Lenders in the non-QM sector are working to get back to the way things were before the coronavirus. Sprout has resumed correspondent lending while a number of lenders have loosened underwriting standards.
Wells Fargo is maintaining its steady issuance of prime non-agency MBS while a pending deal from Neuberger Berman is much larger than the expanded-credit MBS the firm issued in May.
The CFPB is hoping that by removing a firm debt-to-income ratio metric from QM qualification standards, lenders will come up with new techniques to qualify borrowers.
The proposal could eliminate GSE eligibility as a standard for a loan to be deemed a qualified mortgage. The regulator aims to level the playing field between the non-agency market and Fannie/Freddie.
Interest-only loan production dropped nearly 25% in 1Q. Meanwhile, the share of IOs originated in areas vulnerable to storms is increasing. (Includes data chart.)
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