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On Wednesday, Feb. 10, Will Fisher, executive vice president of Non-QM for Mega Capital Funding, joined Andrew Berman, Mortgage Leadership Outlook host and head of engagement and outreach for National Mortgage Professional Magazine, to chat about his career in the mortgage industry, the early days of Non-QM, the collapse of Non-QM during the height of the COVID-19 pandemic, its rebirth, future and more.
Fisher has more than 10 years of experience in the mortgage industry and was recently named executive vice president of Non-QM for Mega Capital Funding. He most recently spent time as division vice president, Non-QM third-party originations for ARC Home LLC. Fisher also spent over six years at Citadel Servicing Corp., now Acra Lending, as director of business development and senior vice president of wholesale, retail loan origination and marketing.
Highlights From The Interview:
- “I have the utmost respect for loan officers and what they go through and the conversations they have on a daily basis to understand every borrower they have.”
- “First off the credit quality. The borrowers that are available and have been available since 2013 in the space have all had much higher credit quality. If you look at the pools of loans that have sold and on securitization for Non-QM you’re going to see an average credit score that’s anywhere from 680 up to 720, could be higher. That’s pretty much the makeup right there.”
- “As far as LTVs go, there is so much more equity in the homes now than there was at that particular moment in time. It’s not that it’s really ratcheting up at a great degree, now you will see some pools at 75, 76 LTV. I’ve seen those, maybe even a touch higher but for the most part it’s right in that sweet spot that we want to be, anywhere between 69 and 72. It’s just credit quality and equity that’s really different this time.”
- Fisher said most originators’ biggest obstacle is they’re scared by the rate and documentation. “I think they don’t know how to pitch it correctly and talk the borrower into it. What I’ve seen is some folks say, ‘Hey, look, I’m going to tell them what they don’t qualify for, mention your product and then I’m going to follow up with them three days from now and I’m going to get them, because they’re going to hear no from so many other people.’”
- “The challenge for the loan officer really is the explanation to the borrower why.”
- “I would go to my retail broker shops and tell those brokers, ‘Show them the wholesale rate sheet show them; where they fit. It’s not going to change. The rate is not going to change and we’re not going to give someone else something better. You know there’s nowhere really else for them to go.’ So, just show them where they fit in the scale and why they fit there and once they see that transparency, a lot of times they say, ‘OK, sign me up and let’s get this rate done.’”
- “I think there’s a lot of trial and error that has been done and tested in the secondary market and with rating agencies,” said Fisher when asked if he believed there would be more products entering the market. “Some of it has worked, some it hasn’t and some of them are still going through their trials. I think we’re going to see a return to things like one-month style bank statements.”
- “I don’t see how much more aggressive or innovative you can be on the DSCR, I’d be a little fearful of going up much higher on LTVs with any type of product that doesn’t require any type of ratio. Yes, there will be more innovation and I think there is going to be more innovation in the underwriting of the loans as far as service levels and automation. I think that’s the next level for Non-QM.”
- “As far as Non-QM, it’s picking back up,” said Fisher. “It’s not quite where it was at the end of 2018 and the beginning of 2019. I’ve heard folks are now at least in the high $60-$80 million a month category. The growth is going to be moving towards the Non-QM as you start to see the rates and the agency conventional papers start to rise.”
- “If you ever thought you were going to have a hangover before, well, you’ve very much gotten drunk on these rates the last couple of months. When that dries up and you have nothing else to hit, Non-QM is going to save you. Non-QM is going to be there to help you get those high dollar loans done, those self-employed borrowers done, those purchases done. It’s going to be a very interesting time in the space.”
- “I think we’re already seeing what Non-QM is going to look like to some degree,” said Fisher when asked what the future looks like under the new administration. “We’re hearing about it from the Chrisman Report or the IMF Daily about new changes and ranks at the CFPB and what they think of the QM-patch, what was done and what was rolled out. Quite frankly, I think it’s going to move back towards a Richard Cordray-style CFPB, if not maybe a little tighter. It’s going to be very interesting for the bigger banks to see how this plays out. I think for the Non-QM hardcore out there, the folks that are dedicated to the space, I don’t see an issue. I just think they’re going to roll with it and keeping doing and get bigger and better at what they do.”
- “It’s going to be a pretty fun next couple of years in Non-QM. Come on in the water is just right. There’s nothing subprime-esque about this.”
Watch the entire interview between Fisher and Berman below.
See all the interviews from the Mortgage Leadership Outlook series on its YouTube channel.