All but the most disciplined mortgage professionals have spent the majority of the last year on refinance business. There’s no shame in that. When the phone is ringing off the hook with slam-dunk deals netting solid commissions, who wouldn’t go after that money? The trouble was, it was easy to get tunnel-visioned, focusing on the in-demand service now while avoiding some of the real estate agent relationships so crucial to consistent purchase business. In the past month, though, that landscape has changed.
“What’s happened with agency refi business is rates have gone up and volume has plummeted. Everybody in the market knew this was coming, the only question was ‘when’. Well, it appears that ‘when’ is now,” said Tom Hutchens (pictured), executive VP of production at Angel Oak Mortgage Services. “Originators have good intentions when it comes to maintaining Realtor relationships and purchase business, but it’s hard to do when the refi business is booming. As refinance volume plummets, now is the time for originators to rekindle those Realtor relationships, because driving purchase activity is going to be the key to their success for 2021 and beyond.”
Hutchens noted that we’re not just entering a hot purchase market, we’re entering a recovery market. So many Americans were impacted financially by the pandemic, and they are bearing scars on their credit reports and tax returns that could push them outside the tight box of agency lending guidelines. As those people get back on their feet, they are looking to buy homes and are asking Realtors what they can do. Hutchens believes that mortgage professionals with a solid understanding of non-QM lending can provide the answers Realtors and borrowers need now.
In a new guidebook released by Angel Oak, Hutchens and the Angel Oak team explain how non-QM lending can empower your Realtor partners to secure more business and, in doing so, help originators stand out in a competitive market. The effort comes down to educating Realtors on the non-QM options available for homebuyers who don’t fit in an agency box. As Realtors ask some pre-qualifying questions of their clients, they can then offer a more creative solution in partnership with a non-QM savvy originator.
Right now, Realtors are being bombarded with emails and calls from originators who want their referral business. Hutchens noted, though, that most of those originators were just promising expertise in agency loans. Well, thousands of other originators do exactly the same thing. Rather than join the crowd, Hutchens believes an originator can stand out by saying ‘sure, I can do a loan for your agency-qualifying clients, but I can also do a non-QM loan for that small business owner you had to turn down last week.’
Between post-COVID financial scars and the rise of the gig economy, more and more borrowers are falling outside tight agency lending guidelines. Real estate agents are seeing this business every day, but likely don't know it can be captured. If a mortgage professional can educate them about non-QM, they’ll create a salesforce out of their Realtor partners, working in lockstep with them to secure deals for this fast-growing borrower segment.
As originators pursue this strategy, Hutchens explained that they can work closely with Angel Oak to become an expert in non-QM lending. As the largest non-QM lender with deep institutional knowledge and direct ties to capital markets, Angel Oak offers a wealth of expertise that originators and their Realtor partners can rely on. Non-QM deals, Hutchens explained, are not always as smooth as they could be and partnering with the right lender is key. That first deal can make or break a Realtor’s trust and if an originator partners with a tried-and-true leader in the space, that can make a world of difference.
What it comes down to, though, is the driving force behind the mortgage and real estate industries: getting people into homes. Millions of Americans are moving now and being able to secure the right deal can shape an originator’s success through and beyond this year.
“According to a Zillow 2021 mover report, the pandemic has caused more than one in 10 Americans to move in the past year,” said Hutchens. “This great reshuffling means that millions of additional households are entering the real estate market, adding to already high levels of demand and straining low inventory. This puts an even higher priority on Realtors and buyers to move with a sense of urgency when it comes time to make an offer. If a Realtor finds a buyer that loves the house but learns they didn’t prequalify because of agency guidelines, this is a moment where an originator’s non-QM expertise can keep a Realtor and borrower from getting burned. If an originator partners with a lender that can make it happen no matter what, they become a one-stop shop. They can do agency products, but you also can do the non-QM side for when deals fall out of agency. You can always be there to help them.”
To learn more about how to empower Realtor partners check out the Angel Oak guidebook here.