Loan buyback demands don’t seem to be an issue in the world of non-QM lending, at least not yet. But that could change, especially for low-capital originators who get swamped by aggregator demands, even on performing mortgages.
The current bad times for lenders can’t last forever. Eventually, the Federal Reserve will ease credit and normalcy will return to the industry. But before we get there, more job cuts will be the order of the day.
Many owners of MSRs will have an opportunity to mark up the asset value of their holdings when reporting third-quarter results. However, the gains likely won’t be all that large.
“When the yield on the 10-year [Treasury] goes up more than 50 basis points in less than a month, something is going to get broken,” one consultant noted.
Margin calls from repo lenders are always a risk when collateral values decline, which is why MBS holders, like REITs, are under watch. The yield on the 10-year Treasury is at a 16-year high — that’s the bad news. The good news: This may be the peak of the cycle.
What are nonbanks getting for their servicing rights in the secondary market and how much of a right does Fannie Mae have to that information? Hard to say, but some factions of the industry are bristling at inquiries from the GSE.