Prepayment rates on mortgage-backed securities with non-qualified mortgages have slowed due to interest rate trends and a shift in borrower characteristics, according to industry analysts.

Two nonbanks — Ellington Financial and MFA Financial — are increasing their emphasis on non-qualified mortgages, but with different strategies.

Carrington Mortgage Services loosens its underwriting guidelines and improves pricing for various expanded-credit products; Home Point Financial joins the expanded-credit market; Essent Group isn't interested in proving PMI for non-QMs...

Mortgage-backed securities with non-qualified mortgages look attractive to some real estate investment trusts. PennyMac Mortgage Investment Trust plans to join other REITs issuing non-QM MBS while officials at Chimera Investment said the firm is considering buying non-QM MBS from other issuers.

Seer Capital Management is set to issue its first mortgage-backed security with non-qualified loans. The New York-based company launched its non-QM program in 2013 and it owns HomeXpress Mortgage, a wholesale lender founded in 2016.

The ability-to-repay rule helped improve loan performance for non-qualified mortgages but a robust secondary market for the loans hasn’t developed, according to an analysis by the Consumer Financial Protection Bureau.

Angel Oak Companies set company records for originations of non-qualified mortgages in 2018 and officials expect more growth this year. “Non-QM is booming, we’re going to set an all-time record in December and we’ve set records each quarter in 2018,” said Tom Hutchens, senior vice president of sales and marketing at Angel Oak Mortgage Solutions. “We’re continuing to see more people participate in the market, which is a great thing.” Through the first three quarters of 2018, Angel Oak ...

Some self-employed workers are missing out on mortgages because of harsh standards included in the Consumer Financial Protection Bureau’s ability-to-repay rule, according to analysts at the Housing Finance Policy Center. “The mortgage market is not adequately meeting the needs of self-employed households,” the analysts said. The HFPC noted that in 2016, about 8.5 percent of U.S. households were headed by a self-employed person and 3.4 percent were salaried but earned some ...