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Angel Oak sets non-QM securitization record since housing crisis

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As 30-year fixed-rate mortgages rose 30 basis points year-over-year, non-QM originations are estimated to grow 400% in 2019.

Angel Oak Capital Advisors got the ball rolling by completing a $609 million transaction, the largest non-QM securitization of affiliated originator loans since 2008. The securitization comprises 1,752 loans with an average loan amount of $348,000 and an average weighted credit score of 710.

"The biggest impact factor is Fannie Mae rates have gone up so refis have gone down. That business dries up as soon as rates tick up a quarter of a point," Tom Hutchens, senior vice-president of sales and marketing for Angel Oak Mortgage Solutions, said in an interview with NMN.

"The phones stop ringing. The net-tangible benefit to a borrower just goes away. That forced originators to look at making sure they have a purchase-driven business and 90% of non-QM loans are purchase transactions."

Angel Oak has now completed nine non-QM securitizations, combining for a total issuance amount of $2.6 billion. All nine were almost entirely backed by mortgages originated by Angel Oak's affiliated lenders.

"The size of this deal reflects our strong investor following and leadership in the non-QM market. Angel Oak's vertically integrated issuer model uniquely positions us in the marketplace because, through our AOMT securitizations, we are able to provide investors with direct exposure to non-QM loans originated by our affiliated mortgage lenders," Sreeni Prabhu, Angel Oak co-CEO and CIO, said in a press release.

During 2018, Angel Oak Companies' affiliates posted a 90% increase in non-QM volume, going along with its plan of doubling its total. If this is any indication, 2019 will bring more of the same.

"Angel Oak has established itself as a leader and pioneer in both non-QM lending and securitizations. We believe our programmatic non-QM issuance further demonstrates the sector’s post-crisis growth, and we look forward to contributing to the continuation of that momentum," said Lauren Hedvat, managing director of capital markets.

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Qualified Mortgages Mortgage rates Originations ATR Underwriting Purchase Refinance RMBS Fannie Mae