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.

White Paper: Profiting from the Boom in Non-QM Lending

A year since the beginning of the global pandemic, the borrower demand for Non-QM lending is higher than ever. Download this white paper to explore the current opportunity in Non-QM lending and how loan originators who prepare now will build stronger businesses in the days ahead. Click to download the Verus white paper.

Applications Down? Verus Mortgage Capital Shares Two Reasons Lenders Should Consider Non-QM Now

Mortgage rates have increased nearly half a point since January. According to the MBA weekly survey, mortgage applications have fallen in eight of the last nine weeks. Rising rates have led to less refinancing activity. In mid-February, their share of mortgage applications dropped below 70% for the first time since October 2020. The purchase marketRead More

Verus Mortgage Capital Leads Industry Back into Non-QM Lending

With $2.6 billion in securitization volume in 2020, leading non-QM issuer offers liquidity  Washington, D.C. – February 22, 2021 – Verus Mortgage Capital (VMC), a full-service correspondent investor offering residential non-QM and investor rental programs, announced that in 2020 it financed nearly $2.6 billion of loans across six-rated and one unrated securitization transactions. As theRead More

comment-alt-dotsflipgeometric-patternmoreverus-logoverus-mverus-v-purple-bgverus-v-purple-bgverus-vverus-v-red-bgverus-v