Hello, and thank you for joining me. My name is Fernando Zoota and I am your host for the podcast and blog, Non-QM Insider, the show where we talk about regulations, guidelines and anything having to do with non-qualified mortgages. The topic of discussion is a follow to the blog “When will things get back to normal in non-QM”. Let’s get into it.
As reported by Inside Mortgage Finance, Angel Oak is set to resume issuance of Non-QM MBS. As a subset of the overall mortgage market, non-QM only exists because of non-agency securitization. Due to the economic effects of COVID-19 the securitization market for non-agency RMBS all but disappeared.
However, there seems to be some good news on the horizon.
Angel Oak, a non-QM lender and leader in the space, plans to issue a $346.0 million deal this Friday. Angel Oak and/or its affiliates originated 85.3% of the collateral. Interesting, approximately 26% of borrowers are on three-month coronavirus-related forbearance plans. I don’t know how this affected pricing.
Neuberger Berman, an independent investment firm, last week issued a $228.9 million non-QM securitization.
This is a critical step, as it’s one of the first securitizations since the negative economic effects of COVID-19.
Another positive for the non-QM market, First Republic Bank, an American bank and wealth management company, plans to issue securitization backed primarily by non-qualified mortgages. The bank’s $300.1 million MBS is scheduled to close on May 29, according to pre-sale reports from Fitch Ratings and Kroll Bond Rating Agency.
In a past blog, I likened loans to widgets. Non-Qm lenders produced widgets (loans) that are sold in the secondary market to eventually become residential mortgage-backed securities (RMBS). Without a market to sell our widgets there is no non-QM. Fortunately, the liquidity crisis we saw in March seems to be thawing. What does all this activity mean? It means we’re close. Yes, some non-QM lenders continue to fund loans, but in general, they’re a watered-down version of non-QM. The issuance of new non-agency MBS means we’re just a bit closer to getting back to normal.
Stay tuned!