Turn Market Data Into Non-QM Deals

Loan originators may describe themselves as problem-solvers, deal hunters and financial advisers. But, John Wise, Executive Vice President of sales at Newfi Wholesale, says the job demands another skill: storytelling.

For Wise, storytelling does not mean spinning a sales pitch. It means translating market data and housing history into a clear narrative that addresses a buyer’s anxiety and helps them make a decision.

Borrowers want answers: When should I lock? What is happening to rates? Is now a good time to buy? Originators cannot predict the market, but they can explain what the data shows, what history suggests and where uncertainty remains.

That role has become more important as high home prices and mortgage rates keep would-be buyers on the sidelines. Wise warned that a sharp decline in rates would likely come at a cost.

“The only way they come down more aggressively is if there's something traumatic that happens in the economy, and none of us really want that. That's bad for real estate. It's bad for consumers,” Wise explained. “If you look at the MBA and Fannie Mae, they're all projecting that rates are going to be about the same for the next couple years — really through 2028.”

Wise calls himself a “part-time economist” as well as a “mortgage guy.” He uses publicly available information from sources such as FRED, or Federal Reserve Economic Data, to ground borrower conversations in credible evidence.

“You have to have a good story to tell,” Wise said. “Take all the data that you have and tell them here's the history [and] here's where we think things are going.”

He also points to long-term homeownership trends to challenge the fear that buying in a difficult market is necessarily a losing proposition.

“That's an important story to know and an important story to tell especially in today's market where values are high and rates are high and you have a lot of people sitting on the fence waiting for opportunities,” Wise said. “They think rates are going to come down and very likely they're not… if they're in this for the long run, then real estate has always always historically been a good investment in the United States.”

Non-QM Products Solve Borrower Problems

A persuasive market narrative can help a hesitant borrower understand the opportunity. Closing the loan still requires the right product. Wise highlighted bank statement loans and second liens as two ways originators can solve common borrower problems.

Bank statement loans are designed primarily for self-employed borrowers and business owners whose tax deductions reduce the income reported on their tax returns, making it harder to qualify for an agency loan.

Wise said the gap between agency and non-QM rates has narrowed, making bank statement loans more affordable. Although the rate may be higher, the product can help a qualified borrower buy a home now and potentially refinance later if rates decline.

Second liens address a different problem: the lock-in effect. Millions of homeowners have accumulated substantial equity but are reluctant to refinance the low rates on their first mortgages. A second lien allows them to access that equity without disturbing the first mortgage.

Wise also pointed to the product’s earning potential for originators, estimating an average commission of $4,000 per loan.

“So if you close two a month, you're on a track to make $100,000 a year of revenue,” he said.

DSCR Loans Require Expertise

Debt service coverage ratio loans provide real estate investors with an alternative to agency financing. Wise said they can be easier to obtain than agency loans and, when structured with a prepayment penalty, may carry a more favorable rate.

“So, not only is it easier than an agency loan, but the rate's better,” Wise said.

Those advantages come with risk, particularly when the property’s DSCR falls below 1.0. An under-one ratio means the projected rental income does not fully cover the property’s monthly debt obligation, leaving the investor to make up the difference.

Wise said that does not automatically make the loan a poor fit. An investor may accept negative cash flow for another strategic reason, such as anticipated long-term appreciation. In those cases, originators should understand what is driving the purchase and ensure the borrower recognizes the monthly shortfall.

Stable rents have helped contain that risk, Wise said, but declining rents could deepen the deficit and make under-one DSCR loans a greater concern.

That complexity is why Tim Solntsev, founder and CEO of Expert Mortgage Marketing, focuses exclusively on DSCR marketing. He helps originators better understand the program and use it to expand their investor business.

“Unfortunately, we're in a market right now where a lot of first-time home buyers, they're just kind of priced out,” Solntsev said. “They're just required to rent, right? So, the DSCR loan is like a perfect platform towards helping investors grow their portfolio.”

Solntsev said many loan officers limit their DSCR business by focusing too heavily on a borrower’s credit score. He encourages originators to understand the broader structure of the program and how it can support an investor’s long-term financial strategy.

As one example, Solntsev pointed to the potential tax treatment of equity accessed through a refinance and the role real estate can play in an investor’s broader tax strategy. The precise consequences depend on the borrower’s circumstances and should be reviewed with a qualified tax professional.

“It's not just owning the property and generating income, but it's also reducing your income to the IRS, which is beautiful,” he said.