Several real estate investment trusts, including MFA Financial and Starwood Property Trust, are expanding their portfolio of non-qualified mortgages. The loans provide attractive returns, whether retained or bundled into an MBS.
Annaly and Chimera are generating strong returns aggregating mortgages, issuing non-agency MBS and retaining subordinate tranches from the deals. Chimera plans to be a regular issuer of non-agency MBS with GSE-eligible loans.
Originations of non-QMs by Impac fell in the second quarter as the lender increased production of GSE refinances. However, officials at the nonbank stress that non-QMs remain an important part of Impac’s business.
Quicken increased its contributions to prime non-agency MBS this year, including $619 million of loans going into deals issued in the second quarter. Characteristics of the deals were largely unchanged.
The proposal to end the qualified mortgage patch available to loans eligible for sale to the GSEs could boost non-agency mortgage activity, though the devil is in the details as the plan plays out leading to early 2021.