Non-QM product options are becoming more popular as lenders try to change their strategy in the face of almost no refinancing activity. In light of this, the Executive Vice President of Production at Angel Oak Mortgage Solutions, Tom Hutchens, stated during a recent discussion on non-QM lending that Everyone in the Industry knows how fast rates have gone up this year. As a result, there were predictions of refinances going down, but they went down quickly. Therefore, whenever that occurs and has been observed in recent years, originators hunt for other products, such as non-QM products.
This approach does provide some difficulties for lenders, though. Although there are logistical learning curves, Hutchens emphasizes preconceived notions about non-QM lending, posing the most barrier to lenders. As such, lenders need to be ready and willing to gain adequate knowledge about this industry space properly.
Since 2013, loan originators have been trained in this space, but the fact that non-QM borrowers and non-QM loans are not the subprimes of the pre-financial crisis, she noted, does seem to be a major issue that has emerged over the years. The non-QM borrower is very qualified, despite what most people who haven’t created non-QM loans might believe.
According to Hutchens, Angel Oak has observed numerous lenders entering and leaving the non-QM industry, frequently leaving when refinancing activity increases. Having a trustworthy non-QM partner knowledgeable about all the ins and outs of swift pivots in product strategy is crucial. Hutchens remarked. To read more about the challenges facing lenders in the non-QM loan space, click here.
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