Firm also announces launch of correspondent channel
Annaly Capital Management, a mortgage real estate investment trust, increased its holdings of non-agency mortgages – particularly non-QM loans – by 45% in the second quarter as part of its push into direct mortgage lending.
“Most, if not the majority, of our purchases are in the non-QM market. And when you look at the non-QM market, it’s actually probably the most advantageous time to issue given where spreads are,” said Mike Fania, head of residential credit at Annaly. “So, at the beginning of the year, non-QM spreads on the AAA that makes up about 75% of what you sell was 85 to swaps. If you fast forward to today, that’s 60 to swaps.”
Read more: Non-QM – the comeback product of the year
During the company’s recent earnings call, Annaly announced that it had started to acquire non-QMs, as well as investment-property and second-home loans, on a conduit basis through its newly launched correspondent channel.
When asked about the advantages that come from opening the conduit, Fania said: “The launch of the correspondent channel allows you to face smaller originators. And the ability to lock best efforts allows you to own the economics of the loan at a much more accretive price than it would if you would participate in the bulk or mini-bulk market.”
Annaly CEO David Finkelstein added that the conduit is “providing certainty of execution to originators, which is a service that they value.”
Before this, Annaly’s non-QM loans were primarily sourced from aggregators, rather than directly from lenders.
