Do you agree with me that today’s housing supply has narrowed, and mortgage demand is uncertain? If you do–even if you are the most conservative of loan officers–then this is the time to diversify your product offerings.
The best way to do that is by promoting non-QM loans and welcoming deserving prospects who are ineligible for agency loans. Yet, despite the sustained performance excellence of non-QM loans, many loan officers continue to avoid them, believing they are the high-risk offspring of the sub-prime mortgages that wrecked the economy 10 years ago.
Five years of evidence proves that non-QM loans are not “high risk.” The default rate for Angel Oak Mortgage Solutions loans is less than two percent, whereas the Mortgage Bankers Association (MBA) reports the default rate of all loans at 3.9 percent. Many established brokers know how safe non-QM loans are. In this shifting market, they are meeting the need to expand pipelines with non-QM loans, and, they are profiting by doing so.
So, you should fill your pipeline by entering the non-QM marketplace. And, you need to know that success requires new knowledge. You especially need to know that all non-QM loans and lenders are not alike. A valid concern of non-QM skeptics is the rapid spread of new non-QM lenders and products.
The most respected non-QM lenders have been serving this special market for four years or more. They only do non-QM, all day, every day. You will quickly discover that these non-QM specialists have perfected their processes to assure better end-to-end experiences than those delivered by lenders new to the industry or bankers who have added non-QM to an agency-heavy portfolio.
Before jumping into the non-QM arena, meet with representatives of three or more established lenders. Ask tough questions about their histories, products and track records. Get references from loan officers whose markets are similar to yours. Discover how each lender solves problems and serves originators such as yourself. Many non-QM lenders offer attractive rates and numerous products, but may not have the technical resources, expertise or depth of personnel needed to close loans on time and deliver customer satisfaction. Make sure you use non-QM lenders who have sound underwriting guidelines.
As the pioneer of non-QM loans and the market leader, Angel Oak Mortgage Solutions is eager to compare its products, technology and service excellence with other alternative lenders. To learn how to enter the non-QM market and succeed, contact your Angel Oak account executive at (866) 837-6312 or visit https://AngelOakMS.com/MAP
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 article originally appeared in the December 2019 print edition of National Mortgage Professional Magazine.