As a member of the Forbes Real Estate Council, I recently wrote about the tremendous future of non-QM lending and I believe my readers of my column in National Mortgage Professional Magazine may benefit from the insights I shared with the Forbes readers. Having witnessed non-QM’s evolution as a safe alternative to sub-prime, I know how visionary leaders built from scratch this credible and reliable industry segment.
Approaching 2020, the proven benefits for borrowers, lenders, investors and originators will grow and the non-QM market will support the long-term health of the mortgage industry. However, the continued success of non-QM products requires originators to choose wisely from among the expanding number of wholesalers entering the marketplace and the loan products they have to offer.
Originators need the right partners and the right approaches. Week after week, new lenders and wholesalers are popping up to cash in on the non-QM sector’s growth. Originators should not assume that each one of them has the knowledge, experience and technical resources necessary to assure smooth and transparent loan processing and customer satisfaction.
Offerings, experience and service vary widely across non-QM wholesalers and direct investors, so it’s critical that originators choose wisely. Above all else, the best non-QM partner has commitment to and experience in non-QM lending. We've seen a flood of new entrants into our industry, and I can say certainly that some are better positioned than others. Much like any other activity, mastery of this work is only gained through thousands of hours of experience. You want a partner that has funded 10,000 loans, not 10.
Originators should evaluate the resources a non-QM wholesaler has committed to their program. Those resources may range from a one-person non-QM “team” to a fully staffed department; some firms only work in the non-QM space. Make sure your non-QM partner has skin in the game, meaning that credit and secondary market decisions are made on behalf of their own capital. Originators should avoid non-QM providers just looking to cash in on a trend and seek out wholesalers and direct lenders that have the resources and track record to help you grow your business.
During the last seven years, I’ve seen and helped spearhead non-QM’s birth and maturation. I can tell you that seven years from now, the winners in the mortgage market will be those who capitalized on non-QM today by picking the right partners and taking an active approach to seek out suitable borrowers.
Tom Hutchens is executive vice president, production at Angel Oak Mortgage Solutions, an Atlanta-based wholesale and correspondent lender licensed in more than 40 states and operating in the non-QM space for over five years. 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 [email protected].
This Sponsored Editorial originally ran in the November 2019 print edition of National Mortgage Professional Magazine.