Secondary markets

The $146 million deal could indicate that volume in the asset class has gotten large enough to support programmatic activity in the pricey housing market.

Common Securitization Solutions has disbanded a group of independent board members originally brought on in early 2020 to look into using the government-sponsored enterprises’ platform to serve a broader market.

Both third-party lenders will purchase conforming loans with balances of $625,000 — 14% higher than the current limit — in anticipation of regulators' action.

While PLS loans still represent a sliver of the overall mortgage market and are nowhere near the $1 trillion level seen before the Great Recession, issuance jumped markedly this year.

Despite the increase, adjustments to single-family loan terms aimed at making payments more affordable remain historically low at the government-sponsored enterprises. But they could grow in line with forbearance expirations soon.

The company will return to selling pieces of its credit exposure to private investors during the last three months of the year, but is still evaluating its strategy for 2022.

While overall volume was down in August, it remained historically strong, particularly in the securitized market for home equity withdrawal loans made to borrowers age 62 and up.

The government bond insurer allowed lenders to become “eIssuers” a little over a year ago, and the move contributed to a large surge in electronic notes this year.

The extension in the number of days investors are locked out of the process comes amid a broader push by the Biden administration to boost access to affordable housing.

Refinancing, high home prices, the concentration of pandemic-related hardships in the FHA market, and the lingering impact of last year’s market disruption all likely played a role in the intensified discrepancy.