What Lies Ahead: The Challenges of Securitizing Non-Qualifying Mortgage Loans

Abstract

Since the financial crisis, the private-label residential mortgage-backed securities (RMBS) market has remained stagnant, in large part because of regulations put in place during the aftermath of the crisis. Although firms have recently begun to revisit private-label securitization, uncertainty in the market is still strong. This article reviews the securitization process, examines the challenges that the private-label RMBS market faces, and explores the opportunities that non-Qualified Mortgage lenders have if they target the right borrowers and follow certain policies and procedures.