Hello, LOs!
Plenty of people have been stark raving mad about the GSEs' caps on buying loans backed by investment properties and non-owner occupied homes.
In January, the Federal Housing Finance Agency and Treasury Department announced plans to limit investment-property loans and second-home mortgages to a maximum of 7% of Fannie and Freddie's balance sheet. The MBA and a bunch of agency-focused lenders called foul and said they needed more time to manage the change.
The earnings calls over the past week illustrate how rocky the implementation has been. Homepoint got rocked and UWM got a bit bloodied as well due to the pipeline "pricing adjustments."
Inside Mortgage Finance today reported that the GSEs issued MBS with $26.41 billion of mortgages for investment properties in the second quarter, down 33.4% from the first quarter. MBS activity from second homes fell by 8.5% to $23.75 billion in Q2, the outlet reported. Total single-family business declined 4.9% in the second quarter from the first.
You know who isn't complaining about the caps? The non-agency focused players. One mortgage executive told me a few weeks ago that they'd seen a big uptick in non-agency product in the last few months. Profits have been soaring, he said.
Robert Williams and Brandon Filson, who run mortgage REIT Angel Oak Mortgage, told me that they see huge growth potential in the non-QM space, partly because the agencies are moving away from investor-type mortgages.
Since the caps came about, Angel Oak is "seeing some of that flow into our space," they said. The mortgage REIT, which invests in first lien non-QM loans primarily originated by Angel Oak's lending entities, made $2.2 million in net income last quarter. The Angel Oak lending apparatus primarily works with brokers, and the mortgage REIT acquired nearly $400 million in new loans in the second quarter.
I'd love to hear from LOs who focus on providing investor loans to lenders. Were you affected by the GSE caps over the last few months? If you're a broker, are you bringing more loans to non-QM lenders? How is that going? As always, you can message me anonymously at jkleimann@housingwire.com.
James Kleimann
Managing Editor, HousingWire
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