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2015: A Big Year for Non-Prime

Tom Hutchens
Mar 21, 2016
In 2013, six years after the sub-prime crisis had played out, lenders tested the waters by reintroducing a new, safer non-prime product to mortgage markets

In 2013, six years after the sub-prime crisis had played out, lenders tested the waters by reintroducing a new, safer non-prime product to mortgage markets. Early uncertainty on the viability of non-prime was quickly stamped out as both borrowers and investors demonstrated a healthy demand for the products.

Despite early success, non-prime lending activity was fairly tame throughout 2014. In 2015, however, the market has really started to take off. Lenders and borrowers alike are catching wind of non-prime product availability, fueling both supply and demand for non-prime products.

Even though there are still only a few lenders that are exclusively underwriting non-prime loans, a handful of traditional lenders have jumped on the bandwagon in an effort to get a piece of the potentially enormous non-prime pie. Though consumer credit quality has continued to strengthen over the last few years, nearly a third of Americans with a FICO score are under 650 (according to FICO as of April 2015).

It’s tough to put an exact number on just how big the non-prime market has grown. Aggregate data for the U.S. non-prime market is limited because there simply aren’t any reliable sources available that track the market. However, anecdotally speaking, things are ramping up. We feel that our in-house statistics paint a fairly accurate picture of the market.

Angel Oak Mortgage Solutions’ year-over-year stats:

►Closed loan volume for 2015 is on pace to more than triple 2014 volume.

Our approved network of broker companies has grown by more than double, from 540 to more than 1,200.

The list of approved states in which we are lending has grown from 20 to 24.

We’ve doubled our staff of account executives to more than 30.

Our Web site traffic has tripled from an average of 67 visitors per day in January to more than 200 per day today.

We receive more than 1,000 loan scenario requests per month through the online “Quick Quote” tool.

We expect 2016 to be even bigger than 2015 for non-prime. As the sour taste of the housing crisis dissipates, the general public will warm up to learning why it is truly different from the era of pre-crisis sub-prime. Two data points in particular drive this point home: The average credit score of our portfolio of loans is over 670 and we haven’t had any defaults in our non-prime program.

The mortgage industry needs non-prime. There are just too many Americans who fall outside of qualified mortgage (QM) lending standards. Non-prime and non-agency loans are the key to bringing much-needed liquidity back to the U.S. mortgage market.


Tom Hutchens is senior vice president of sales and marketing at Angel Oak Mortgage Solutions, an Atlanta-based wholesale lender currently licensed in 24 states. Tom has been in the real estate lending business for nearly 20 years. He may be reached by phone at (855) 539-4910 or e-mail

This article originally appeared in the December 2015 print edition of National Mortgage Professional Magazine.

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