Jumbo mortgages

SEMT 2023-2 shifted some of its underwriting from traditional full documentation to agency underwriting, with the latter accounting for 14.1% of the pool balance.

The entire pool is comprised of fixed-rate, fully amortizing mortgages, with an average balance of $901,373. They are also first-lien loans.

All but 501 of the loans in the pool were assessed following the new general QM rule. Otherwise, the pool is largely comprised of jumbo, prime loans.

It’s getting easier to close bigger loans for higher-priced properties, but credit is expanding slower for first-time buyers.

Upcoming changes to underwriting regulations, as well as the end of the QM patch, in addition to growing home values, all add up for this market to have a good year.

The pool of 359 loans also on average carry higher balances (over $900,000) compared to the REIT's earlier pass-through deal this year.

But existing deals are likely to experience issues resulting from higher defaults, faster prepayment speeds.

Lenders also increased jumbo product availability as well as rolling out new SOFR-indexed ARMs.

Conditions have improved for the first time since November.

However, those who aren't current bank customers need to have $1 million in a qualifying account.