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.

Non-QM vs Non-Agency 2.0 – What You Need to Know

For more than a century, homeownership has been the bedrock of the American Dream. And home mortgage finance, in turn, has been contoured by the path of American history. This evolution, frequently in response to and occasionally the cause of major historic events, continues to this day with the re-emergence of the non-agency 2.0 market.Read More

Verus Mortgage Capital was the Largest Non-Agency RMBS Issuer in 2023

Washington, D.C. – March 15, 2024 – Verus Mortgage Capital (VMC), a correspondent investor specializing in residential non-QM and investor rental programs, was the top issuer of non-agency mortgage-backed securities last year. In 2023, the non-QM sector was the largest subsector of the non-agency space representing roughly 40% of total issuance. A recent ranking byRead More

A Comprehensive Guide to Closed End Second Lien Mortgages

In the world of mortgage finance, closed end second lien mortgages have emerged as a valuable solution for borrowers seeking access to funds. Homeowners can use the money from their home’s equity for repairs, tuition, renovations, or debt consolidation. These mortgages are flexible and affordable. This blog post explains closed end second lien mortgages, sheddingRead More

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