Originators looking for their next Non-QM loan may not need another lead source. They may need another look at the borrowers already in their databases.
That was a recurring message during National Mortgage Professional’s “Fresh Off the Expo Floor: What Attendees Were Saying” webinar, presented by Angel Oak Mortgage Solutions following Originator Connect 2026.
The discussion, moderated by NMP Managing Editor Czarinna Andres, featured Angel Oak Vice President of Business Development Eric Morgenson, Vice President and Regional Sales Manager Larry Mize, and Account Executive Rubina Sarwal.
Fresh from conversations with brokers and originators at the conference, the panel identified three largely connected sources of potential production:
homeowners with substantial equity,
self-employed borrowers who do not fit conventional income requirements,
and real estate investors facing difficult properties or trapped capital.
The panel’s advice was blunt: Stop waiting for borrowers to request Non-QM products by name.
Start With The Existing Database
Morgenson described past clients and previously declined borrowers as some of the lowest-hanging fruit in the market, particularly borrowers who previously closed bank-statement loans and may now have equity available.
“We’re in a full-blown cash-out world right now,” Morgenson said, pointing to the combination of record residential equity, elevated consumer debt, and homeowners holding first mortgages with rates well below those available today.
Mortgage holders collectively entered the third quarter with nearly $18 trillion in home equity, according to ICE’s August Mortgage Monitor. That equity has become increasingly important to borrowers reluctant to replace their low-rate first mortgages.
More than half of the equity withdrawn during the first quarter came through HELOCs and second liens, which recorded their strongest first-quarter lending volume in 18 years, ICE previously reported.
Instead of asking borrowers to refinance their first mortgages, Morgenson encouraged brokers to review second-mortgage and home equity options. Angel Oak currently offers second mortgages of up to $750,000 and combined loan-to-value ratios of up to 90% on qualifying bank-statement loans, he said. Programs, terms, and borrower qualifications apply.
“Never underestimate the desire for a self-employed individual or an entrepreneur to get their hands on capital,” Morgenson said.
Sarwal urged originators to become more proactive in identifying those needs. Self-employed borrowers may be looking for money to renovate a property, support a business, acquire another investment, or improve portfolio cash flow without knowing which financing options are available.
“There’s a difference between waiting for someone to come to you and say, ‘I’m a self-employed borrower who needs a bank-statement HELOC,’ versus proactively realizing the opportunity,” Sarwal said.
Mize added that equity withdrawals are not always about consolidating consumer debt. Business owners may use the money to expand their operations or fund another investment.
Morgenson said borrowers are tapping equity for everything from property renovations and additional real estate purchases to debt repayment and weddings.
“They’re rehabbing properties, they’re buying more real estate, they’re paying off debt, they’re paying for weddings,” he said.
“Imagine financing a wedding,” Mize jumped in, drawing laughs from the panel.
The exchange captured the livelier message behind the product discussion: Borrowers may have far more uses for their equity than originators realize.
Ask About The Borrower, Not The Product
The panel also warned against allowing borrowers to prescribe their own loan structure.
Mize said a borrower may contact an originator asking for a debt-service coverage ratio loan without realizing that a bank-statement loan could provide a better fit or potentially better pricing. Other borrowers may be better served by a profit-and-loss statement, 1099, or asset-qualification program.
The problem is that originators sometimes hear “DSCR” or “bank statement” and immediately begin processing the requested product without developing a complete picture of the borrower.
“Not asking enough questions,” Sarwal said when asked about the most common Non-QM mistake. “A lot of people just assume what borrowers can and can’t qualify for.”
She encouraged brokers to think of Non-QM as an assortment of possible solutions rather than a series of isolated products. An originator who concentrates too narrowly on one program may ask only the questions required for that program and miss a more favorable structure.
“Shift the mindset from, ‘Does this loan fit Non-QM?’ to, ‘Which Non-QM solution fits best?’” Sarwal said.
That message echoed another Originator Connect discussion in which speakers urged originators to pair market knowledge with Non-QM products instead of simply pitching rates or individual programs.
For Angel Oak’s prequalification process, the panel repeatedly emphasized the importance of a complete Uniform Residential Loan Application, or Form 1003. Multiple businesses, bank accounts, ownership structures, and income streams become harder to evaluate when the initial application is incomplete.
“It is the complete loan story,” Morgenson said of the 1003.
Investor Loans Can Produce More Than One Closing
Investor business was another major theme at Originator Connect, particularly DSCR loans and strategies for freeing capital tied up in rental properties.
Mize said one investor relationship can generate multiple transactions when borrowers pull equity from existing properties to acquire additional ones.
“They’re not just going to send you one loan and say, ‘See you later,’” Mize said. “We’re seeing two packs, three packs, four packs, five packs, eight packs, and 10 packs of loans coming through our door.”
He recommended that originators attend local real estate investor meetings and develop relationships with hard-money lenders, who often need longer-term exit financing for their clients. Accountants, financial advisers, property managers, and real estate agents can also provide openings to reach business owners and investors.
The panel also discussed the uncertainty that can arise when a DSCR file depends on projected market rent. If an appraisal’s rent schedule comes in below the amount used to structure the loan, the transaction may no longer meet the required coverage ratio.
Mize said Angel Oak uses a rental automated valuation model during prequalification to provide an earlier estimate of market rent. The lender also offers qualifying no-DSCR options and programs for short-term rentals, subject to its underwriting guidelines.
Determining the likely rent before ordering an appraisal can help brokers avoid spending time and borrower money on a structure that was never likely to work, he said.
DSCR loans have become a larger part of the Non-QM market, but the product requires originators to understand the investor’s complete strategy. Speakers at NMP’s Non-QM Summit cautioned that a property with a ratio below 1.0 does not generate enough projected rent to cover its monthly debt obligation, making it important for the borrower to understand and be prepared for the shortfall.
Difficult Properties Remain An Opening
The borrower is not always what prevents a loan from fitting the agency box. In many cases, the property is the problem.
Mize said brokers at Originator Connect showed considerable interest in financing for non-warrantable condominiums, condo-hotels, short-term rentals, accessory dwelling units, and other complicated property types.
In California, the panel highlighted condominium projects affected by balcony inspection and remediation requirements. Some units may be difficult to finance conventionally while inspections or repairs remain unresolved, creating a potential opening for lenders willing to evaluate the individual unit and project.
Short-term rentals were another area of interest. Mize said Angel Oak can use AirDNA revenue estimates when evaluating certain short-term rental properties. The company also finances some condo-hotels and non-warrantable condominiums that fall outside agency requirements.
Sarwal cautioned originators against equating an unusual property or borrower profile with an unworkable transaction.
“Just because they come to you with a complicated profile or complicated property doesn’t mean the programs are complicated,” she said.
The distinction matters as more lenders treat Non-QM as a regular source of production rather than an occasional rescue product. Fairway Home Mortgage recently said effective Non-QM marketing could produce two to three additional monthly closings, while an earlier NMP town hall found that 46% of participants derived less than 10% of their business from Non-QM.
The Largest Barrier May Be Confidence
When asked why more brokers have not built consistent Non-QM production, Morgenson did not blame a lack of borrowers or products.
“It’s a mindset. It’s a mental block,” he said.
Originators who are not comfortable with bank-statement calculations, DSCR requirements, or alternative property types may avoid approaching business owners and investors altogether. That hesitation can leave viable borrowers unserved and potential commissions untouched.
Mize advised brokers who are new to Non-QM to begin with the borrower rather than trying to master every product immediately.
“Don’t worry about a particular product,” he said. “Look at a particular type of borrower, and that’s a self-employed borrower.”
Sarwal recommended beginning with a manageable prospecting goal:
identify self-employed borrowers in the existing database,
contact former bank-statement clients about their current equity needs,
and revisit applicants who may have been rejected under agency guidelines.
“If you’re not doing it, you’re leaving money on the table,” she said.
The larger takeaway from Originator Connect was that the next Non-QM opportunity may already be sitting in an originator’s CRM. Finding it begins with asking more questions before assuming the borrower or property cannot be financed.
The conversation was lively, practical, and occasionally blunt, much like the discussions taking place on the Originator Connect expo floor. Register for NMP’s next Non-QM Town Hall: What Originators Are Doing To Finish The Year Strong. Follow NMP’s events calendar for more upcoming webinars and industry conversations.
