The Resurgence of Non-Agency Residential Mortgages and RMBS
The 2007-2008 housing crisis led to the near disappearance of non-agency mortgage origination. Almost a decade after the crisis, however, non-agency lending and securitizations are making a comeback with much more stringent underwriting criteria and present a unique investment opportunity.
Non-agency residential mortgage lending all but disappeared during the fallout of the housing crisis as lenders adapted to a drastically different mortgage landscape. Though heightened regulation helped clean up the mortgage industry, it also prevented many good borrowers from getting government-backed loans. The vacuum has created an opportunity for private lenders who are willing to offer properly priced mortgages to strong borrowers who fall outside the government's “credit box.” Angel Oak Capital's Lu Chang takes an in-depth look at how the market is evolving to the increased demand from both borrowers and investors. She also explores the recent uptick in securitizations of non-prime, non-agency mortgages and the unique investment opportunity it presents.