SFA Research Corner: Now You Cap It, Now You Don’t—FHFA Actions Added to Record Year for Non-agency RMBS

Non-agency RMBS is on track to surpass $200 billion, a record for the sector. Of that total, $17 billion, or 9% of the non-agency RMBS market is backed by agency-eligible investor mortgages, according to Deutsche Bank Securitization Research. Issuers turned to the private market to fund this loan type after the FHFA announced a 7% cap on Fannie Mae’s and Freddie Mac’s purchases of mortgages on second homes and investment properties. The suspension of the cap is under review by the FHFA. While suspended, new issuance might move away from the private label market and along with the recent 18% increase in loan limits, could further muddy the waters for the PLS market as it tries to commit to build infrastructure to support the housing market.