Issuers of expanded-credit MBS have significantly increased deal volume this year without reducing underwriting standards in terms of traditional credit characteristics. Average credit scores for loans in the transactions have actually improved this year.

Presale reports for nearly a dozen non-agency MBS have been published in the last two weeks, including three deals from JPMorgan Chase.

Issuance of expanded-credit MBS more than doubled on an annual basis at the end of the third quarter while deals backed by prime mortgages and GSE-eligible loans declined. The expanded-credit sector is expected to continue to grow, according to industry analysts. (Includes data chart.)

Issuance of non-agency MBS slowed near the end of the third quarter but presale reports for a number of deals have been published this month and more securities are on the way.

There’s no consensus among industry participants on how the CFPB should address the “patch” for qualified mortgages. However, lenders generally agree that Appendix Q of the ATR rule needs a major overhaul.

The debate around the qualified mortgage “patch” has shifted to whether the non-agency market can handle the volume that currently is delivered to the GSEs.

Non-QM MBS from affiliates of Angelo Gordon and Caliber Home Loans are in the works along with a deal backed by investment-property mortgages from JPMorgan Chase.

In comments on ways to address the end of the qualified mortgage patch, the Treasury suggested using a bright-line test while Redwood cautioned against using a metric based on the interest rate of a mortgage.