Early non-QM player sees the space continuing to expand

by Ryan Smith11 Sep 2018

With rates on the rise, non-QM is bigger than ever – and one of the first companies in the space, Impac Mortgage Corp., is growing right along with it.

“Impac has been in the non-QM space longer than any other company,” said Ryan Carry, vice president of national sales.

“We’ve been a publicly traded company since 1995. We actually originated right around $90 billion up to 2007,” he said. “We relaunched non-QM in late 2014 or early 2015 roughly. We’re actually the only company in the non-QM space that was there pre-crash, and we were also one of the first leaders during the rebirth of non-QM.”

With interest rates rising, Carry said that getting into the non-QM space was more important than ever for originators.

“We’re in an up-rate environment; you have compression going on in the mortgage space in general,” he said. “Typically in times like these, the industry and the originators within it tend to spread out into alternative products. If I’m a $10 million-a-month loan officer that could possibly compress down to $6 million in an environment like this – I’d want to find something to backfill that with.”

Many originators are doing just that, resulting in stratospheric growth in the non-QM sector.

“It’s growing extremely quickly,” Carry said. “The charts we look at tell us that last year there was about $8 billion (in non-QM originations). Impac accounted for 12% to 13% of that, so we’re a pretty big player in the space. This year, we expect industry-wide non-QM originations to be around $20 billion, and next year, around $32 billion – so you’re looking at a huge growth trend line there.”

Carry said that the rising tide of non-QM has lifted Impac, with the company growing “tremendously in the last two-and-a-half or three years.”

However, Impac’s growth isn’t just a matter of luck, Carry said; the company also has history and a product line originators want.

“We’re an original player in the game; this isn’t our first rodeo.” Carry said. “We’ve been originating non-QM since 2014, and we were originating all the way back in the late 90s. We also have one of the best product menus in non-QM. We’re not just focusing on one or two products.”

For instance, the company recently launched its Bank Statement Premier program, a program for borrowers who have shown “exceptional money management skills.”

“It’s our regular bank statement program with a little tighter of a credit box and substantially better pricing,” Carry said. The Bank Statement Premier program features a floor rate of just 4.99% and loan amounts up to $3 million.

Impac also recently entered into a partnership with a global private equity firm to sell up to $600 million in non-QM loans over the next 12 months. Impac said that given current demand, it expects loan production to significantly outpace that commitment. The private equity firm is currently working on a securitization that is 100% backed by Impac’s non-QM loans. Impac expects to co-invest in future securitizations.