Originations are declining due to a turbulent mortgage market, while the number of underserved borrowers who need non-QM products is growing. There will always be a segment of the borrower population that is ineligible for a mortgage under conventional standards. This sizable clientele includes self-employed people, real estate investors, and people who have had credit events.
Prospecting for these forms of borrowers helps defend your company against market fluctuations. Originators that actively engage inside the non-QM area are closing extra loans every month. Here is a brief description of prospective client profiles for non-QM loans for lenders to be on the lookout for.
- Self-Employed Individuals: Upwork estimates that 59 million independent contractors are in the United States, and that number is rising. The gig economy and 1099 employees are also included. These are a lot of prospective borrowers. The problem these borrowers encounter is that they frequently need to refrain from using their tax returns because of significant tax write-offs. Meanwhile, they have excellent credit and can afford the house.
- Real Estate Investors: Throughout 2022, the amount of investment properties has exceeded the purchase of primary residences. No matter the market, marketing to real estate investors is profitable. Experienced investors will figure out ways to keep expanding their portfolios.
- Credit Challenges: To obtain a mortgage, borrowers do not have to wait seven years after a foreclosure or bankruptcy. Credit-worthy borrowers can be closed successfully by you as a lender using one of your non-QM loan products.
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