Are declined conventional/agency loan applicants eligible for a non-qm loan?

While the lower interest rates have been a surprise for mortgage lenders, there are still borrowers who do not qualify for conventional loans through the agencies (Fannie Mae/Freddie Mac). But are these prospective borrowers just out of luck or is there a responsible alternative for these creditworthy applicants? Let’s examine two common situations:

  • Self-Employed – In today’s economy, well over 15 million individuals are self-employed, and that number is expected to continue to rise. Self-employed borrowers often have some of the largest challenges with qualifying for conventional loans. Their income may not be regular, finances more complicated, and documentation a challenge. But careful analysis of the borrower could reveal that a non-QM product that takes a more holistic look at the credit profile may be a viable alternative. According to an article (no longer posted) in HousingWire, two-thirds of non-QM borrowers used some level of alternative or limited documentation, and about one-quarter were denied a prime-rate loan due to a prior credit event.
  • Borrowers Looking for Additional Financing Options – For many borrowers, the traditional, 30-year fixed-rate loan is the safe, predictable product they are looking for. However, many other families are interested in more options, and that’s when non-QM loan products, like an interest-only, cash-out refinance might make sense. A possible scenario includes a borrower who plans to move out within a year or two.

Lenders with borrowers who might be a good fit for these alternative products and options need an investor partner that is experienced, specialized in the non-QM space, with the technology and trained staff to execute and deliver. The non-QM market has exploded over the past few years (as much as $40 billion projected in 2019), and experts estimate that as much as $200 billion annually in unmet demand exists. Verus offers a growing selection of loan products for borrowers who don’t fit the traditional credit box, along with the experience and commitment to help correspondent lenders succeed.

Verus Mortgage Capital Doubles Issuance, Increases Bond Investor Participation by 60 Percent in 2019

Leading non-QM issuer closed 14th and 15th RMBS Transactions Washington, D.C. – January 6, 2020 – Verus Mortgage Capital (VMC), a full-service correspondent investor offering residential non-QM, investor rental and fix and flip loan programs, finished 2019 strong. It recently finalized its 14th and 15th rated RMBS (residential mortgage-backed securities) transactions for $533.5 million andRead More

Verus Mortgage Capital Introduces Prime Ascent Plus

Washington, D.C. – December 4, 2019 – Verus Mortgage Capital (VMC), a full-service correspondent investor offering residential non-QM, investor rental and fix-and-flip loan programs, announced the launch of Prime Ascent Plus, a higher balance loan program for applicants with alternative income documentation. The following features are available to choose from: LTVs up to 90% FICOsRead More

Non-QM Continues to Grow: But where, exactly, does opportunity await?

The non-QM market, predicted to rise by as much as 400% this year, continues to be an important lending channel for many mortgage bankers. Particularly when 2020 is expected to see a slight decline in originations, finding new ways to replace volume is more crucial than ever. A recent survey of loan officers found aRead More

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