NQM Redemption Momentum Builds as Execution Window Opens
A sizable pipeline of 2023 and 2024 vintage non-qualified mortgage (NQM) transactions is scheduled to reach their optional redemption dates in 2026 and 2027, which could provide a meaningful source of seasoned, performing, and at- or above-market rate collateral to an already active NQM market. This refinancing opportunity stands in stark contrast to the lingering backlog of NQM transactions whose earliest optional redemption dates occurred between early 2022 and mid-2025, which are either generally comprised of low coupon collateral and/or became eligible when securitization spreads were not conducive to significant issuance. KBRA first highlighted the beginning of this backlog in its 2022 commentary (see Non-QM Redemption Backlog Builds). Issuers have recently shown success in capitalizing on securitizing called collateral, with seasoned deal issuance reaching new…
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