Issuance of MBS with non-qualified mortgages is growing even as insurance companies increase their purchases of non-QMs as whole loans. Investor demand for the products looks likely to remain strong.

Non-agency MBS issuers typically ensure properties in the deal are damage free. That standard can be difficult to achieve if a hurricane strikes while the deal is still in the works.

Issuance of non-agency MBS backed by scratch-and-dent mortgages to date this year has surpassed issuance through all of 2023.