The origination and securitization of loans that don’t meet Qualified Mortgage requirements has been expanding, and performance is strong. But higher rates are leading to higher prepayments.

A recent expansion has been noted in the origination of loans that don’t meet the Consumer Financial Protection Bureau’s QM criteria, which became effective in January 2014.

A majority of non-QM loans, which presume a borrower satisfies Ability-to-Repay assessments, are either carried on the lender’s balance sheet or traded as whole loans.

Source: Mortgage Daily