05/05/2022 | by Sarah Borchersen-Keto

Angel Oak Mortgage, Inc . (NYSE: AOMR) CFO Brandon Filson sees the non-qualified mortgage (QM) loan segment reverting over time to its historical level of about 10% of the overall mortgage market, compared to 2% today, providing the mREIT with significant opportunity for growth in the years ahead.

Speaking on the REIT Report, Filson noted that 10% of the overall market would be about $200 billion, versus about $25 to $50 billion today.

Angel Oak Mortgage, which went public in June 2021, focuses on acquiring and investing in first lien non-QM loans and other mortgage-related assets in the U.S. mortgage market. Non-QM loans are not backed by government agencies and are aimed at homebuyers unable to meet the strict criteria of a qualifying mortgage in areas such as income or personal debt.

Filson said an important avenue for the mREIT’s growth is reaching out to self-employed borrowers who left the market following the global financial crisis and haven’t returned. He noted that market penetration rates for such borrowers are at the lowest level in decades.

During the podcast Filson also noted that while there is currently book value pressure, as well as some margin compression, credit “will still perform nicely.” He added that while rising rates are likely to present challenges for all of fixed income and residential mREITs, “as things reprice, we believe there are many opportunities to be had in the space.”