Judging by the size of the crowd in attendance for the “Why the Non-Agency Market is a Must for Your Success” session at the Mortgage Bankers Association’s Annual Convention & Expo in Las Vegas, you would think no one needed to have Non-QM loans in their arsenal.
But nothing could be further from the truth.
“I’m surprised to see so few people here,” remarked Max Slyusarchik, CEO of A&D Mortgage. “It’s very strange to me because it’s super hot and if you are not doing Non-QM lending, you are leaving money on the table.”
Moderator Eloise Schmitz, CEO and co-founder of LoanNEX, a pricing engine for non-agency loans, detailed the state of the market for those in attendance, noting that Non-QM lending is up 88% year-to-date, making it “the fasted growing segment” of the mortgage market.
If that didn’t draw their attention, Tom Davis, chief sales officer at Deephaven Mortgage LLC, sure did when he said Non-QM volume will hit $100 billion this year.
“It will be a banner year for Non-QM,” Davis said.
Schmitz said lenders these days need to offer loans for each and every type of borrower, whether it is the slam dunk individual looking for a conventional mortgage, or self-employed individuals, entrepreneurs, or investors.
“The market wants access to all options,” Schmitz told the audience.
“If you think subprime when you think Non-QM, you should think again,” said Tom Pearce, chairman and CEO of MAXEX. “Nothing could be further from the truth. These borrowers have high FICO scores … they just don’t fit the agency box.”
Pearce pointed out that the non-agency segment of the market is experiencing 80% job growth, and Davis noted that the 18 million people who are self-employed is as many as there are military veterans, “if not more.”
“If you’re not in it,” Pearce noted, “you’re missing out.”
Lisa Schreiber, senior vice president of correspondent lending with eResi Capital, said lenders these days need multiple sources of income, and working with borrowers with strong assets who are not served by the agency market is one way to do just that.
“When someone doesn’t fit one solution, you can offer another,” added Schmitz. “Non-QM is a powerful tool for a sales team and for the consumer, too. It’s a great way to differentiate yourself.”
One reason some lenders don’t want to tread in the Non-QM space is their fear that liquidity may not be available when they try to sell the loans. But Davis said the product “performs so well that there’s more demand for them from investors than we can possibly meet.”
Schmitz’s advice: “If your investors aren’t willing to buy Non-QM loans, there are plenty of others with an appetite for them.”
