MBS

Lenders financed the properties through first-lien, fixed-rate mortgage loans, most of which were on 30-year terms extended to prime borrowers, many self-employed.

Anticipation of the Federal Reserve’s balance-sheet reduction is weighing on bonds backed by mortgages, but the actual event may make them an attractive alternative to corporate debt.

Higher mortgage rates are adding to pressure on would-be buyers in a market where purchase prices are still skyrocketing two years into the pandemic housing boom.

The loans in the pool, all of which are fixed-rate and first lien, have an average balance of $426,504, and the top five loan balances account for 3.4% of the pool.

Almost all of the underlying loans had been pooled in Ginnie Mae MBS deals, but the loans had been repurchased after they became seriously delinquent.

Only about 1.0% of the mortgage assets in the collateral pool are for the respective borrowers’ personal use, and qualify as mortgages under Regulation Z.

Secured by a single Morgan Stanley first-lien mortgage, the SFR is the largest deal since the program priced its $2 billion transaction in July 2021.

Non-QM assets overlap almost perfectly with the portion of loans, 52%, financing properties where the borrower intends to maintain as a primary residence.

The bank’s approval rate for Black applicants was the lowest among major lenders, the Bloomberg analysis of federal mortgage data found.

This is the third publicly rated, non-agency securitization to price in more than a decade. The collateral is FHA seasoned, non-performing and re-performing.