This article was produced by Angel Oak Capital as part of their valued industry partnership to Insurance Investor.

Advantages of Non-QM Compared to Agency Residential Mortgages.

When evaluating relative value in Non-QM, one advantage over Agency loans is the improved convexity, or a flatter S-curve profile. The S-curve represents the prepayment behaviour of borrowers at different rate levels or incentives. In addition to advantages related to prepayment risk, the credit profile of Angel Oak’s Non-QM collateral compares favourably to that of Agency mortgages. As outlined in the linked whitepaper, we examine relative value in the world of residential mortgage loans, focusing on a comparison between Agency collateral and Non-QM Bank Statement and Investor (DSCR) loans. 

Read the full piece here.