Non-QM RMBS Swells to $78 Billion as Impairments Rise

Non-qualified mortgage lending serves borrowers who often cannot meet conventional income-documentation requirements, including self-employed applicants and people with nontraditional earnings. Products such as bank-statement loans use alternative records to assess repayment capacity. The sector’s growing presence in residential mortgage-backed securities shows that credit once confined to specialist lenders is moving closer to the mainstream capital markets, while transferring more of its underwriting risk to bond investors.

Non-QM RMBS issuance has reached $78 billion, according to the latest data from dv01, even as the overall impairment rate climbed to 6.27%. Lenders are continuing to broaden underwriting standards to capture demand left unmet by traditional channels. Carrington and other firms have begun accepting lower-credit-score borrowers who rely on alternative documentation, helping bank-statement mortgages and similar products gain wider adoption despite signs of deteriorating loan performance.