Choose the Right Partner and Expand Your Loan Offerings with Non-QM
The 2021 mortgage market is expected to perform well throughout the year ─ even though total mortgage volume recently fell to its lowest point in 15 months, with declines seen in both weekly purchase and refinance activity, according to the latest data from the Mortgage Bankers Association.
If you see a decline in mortgage applications, you are not alone. And while it may be tempting to chase a shrinking market with lower fees and profits, we believe a more profitable way to keep your pipeline full this year is by offering non-agency (non-QM) loan programs. Creditworthy borrowers such as the self-employed, foreign nationals, investors, credit challenged and those seeking higher-balanced loan amounts (JUMBO) were faced with dramatically fewer financing options in 2020. But as warehouse lines continue to be replenished and more non-QM programs become available, lenders can answer more borrower needs and reap the financial benefits at the same time.
Choosing the right non-QM partner
There are a few key considerations that any lender interested in capitalizing on the non-QM market trends should consider. Here are four of them.
Choose a partner with experience
The right partner will have a history in the non-QM sector. It should be more than a few months or even a few years. Executives who have managed through market volatility since early 2000’s will have better insight into how the market moves and how to manage the risk. An experienced partner like Verus Mortgage Capital has the right suite of programs, tools, training, and, most importantly, funding to build your success and growth.
We understand your needs and the needs of your prospects. Partner with a non-QM investor that has flexible programs which let you help underserved mortgage customers, including the self-employed and foreign nationals.
Choose a partner that offers products your borrowers need
Non-QM products are, by definition, any loan product that does not meet the CFPB’s definition of a Qualified Mortgage. That’s an entire universe of opportunity. Find a partner that knows how to offer the products your borrowers are seeking.
The right partner will have documentation and verification policies that make it practical to serve credit-worthy borrowers without standard documentation. While each situation is unique, Verus may be able to help you with bank statement mortgage loans and other income and credit verification documentation such as 1099 forms and other options.
More and more borrowers are requesting Jumbo and bank statement loans. The self-employed are also increasingly seeking viable loan options. To meet this jump in demand, you should look for a partner that knows how to fund these types of loans. Some investors or wholesale non-QM lenders exclusively purchase certain kinds of Jumbo products. Others will buy both QM and non-QM Jumbo loans. A partner with experience understands this and can accommodate multiple programs.
Choose a partner with an expert team to support your growth
Lending in the non-QM world means that you may not always have a detailed seller’s guide to tell you how to originate the products correctly. Underwriters and loan processors need to have access to experienced support staff who can guide them so that every loan moves through the pre and post-closing processes smoothly.
A good helpdesk is an investment that not every company will make, but it’s critically important. Find out what your partner provides in terms of support and don’t settle for less than you need.
In addition, an experienced sales staff will add value to every transaction and will guard the growing relationship. Over time, these champions become invaluable to mortgage lenders and help them grow their businesses.
Choose a partner who is not afraid to innovate
What we have today may not be sufficient to meet our needs tomorrow. When you choose a partner, always make certain that you are working with people who have committed to the non-QM space and invested enough to be innovative.
For our part, we will continue to innovate, and do whatever is necessary to provide liquidity to this space and our correspondent lenders. Given what we saw happening in this market over the last year, we are committed to be a leader in the space, in terms of today’s loan products, new loan products, and securitizations. We are in this business completely and exclusively.
As rates slowly creep up and agency and refinance production slows down, non-QM programs can be the driver behind your continued growth throughout the coming year.