Why one lender is “laser-focused” on non-QM this year

by David Kitai02 Feb 2021

After the “pause” in spring of 2020 that hit non-QM harder than conventional lending operations, the sector has roared back to life since Q3 of 2020. Lenders are growing volumes again, hiring, and scaling up their capacity driven by high-demand for these loans that capture so many Americans who fall outside conventional lending guidelines.

One of those lenders is Luxury Mortgage Corp.®, and while the lender’s operations extend throughout the mortgage space, one of their key priorities for 2021 is serving the non-QM market. Luxury Mortgage’s CEO, David Adamo (pictured), explained why they’ve decided to place this emphasis on non-QM, and how they’re going to help other originators capture the market in 2021 and beyond.

“We view ‘non-QM’ as a vitally important segment of residential finance, providing access to liquidity for qualified borrowers who otherwise would have very limited options,” Adamo said. “We view our participation in this market as serving a greater good. This is a unique and worthy value proposition that we are committed to delivering to this borrower segment. During the early months of the COVID-19 pandemic, we further demonstrated this commitment by retaining our entire TPO non-QM employee base while non-QM lending was essentially shut down and many other companies decided to close their doors.”

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In the immediate term, Adamo and his team are focusing on tech-integration and operational efficiency, to deliver the best service possible for the company’s lenders and borrowers. In this fast-growing space, they’re also emphasizing enhancements to their “box” that will allow them to serve more qualified borrowers.

Adamo emphasized Luxury’s resilience through the early days of the pandemic as key to their current non-QM push. The company retained all its staff through the “pause” in spring, and so their operation has been able to rapidly come back online and rescale since. Adamo explained that they’ve been on a steady upward trajectory since they reopened their doors, in large part because they’ve kept the right people in the right places.

While lenders like Luxury have stepped up their non-QM efforts this year, many independent brokers and originators are considering deepening their knowledge of the space. Given the level of competition in the purchase market most experts expect this year, non-QM could be a competitive advantage for many originators. To support this effort, the Luxury team has overhauled its TPO website while developing a seminar series for originators looking to learn more about non-QM.

Adamo regularly meets with new originators, curious about the space and how Luxury can help them. He emphasizes the importance of training programs like his seminars which equip them with the tools they need to be successful. With that knowledge, these originators can better manage borrower expectations and succeed for their clients. He instructs them on Luxury Mortgage’s Simple Access suite of non-QM products built around five primary offerings: Full Doc, Bank Statement (12 or 24 months), 1099 Only, Asset Qualifier, and DSCR programs.

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As for non-QM veterans, Adamo believes his team still has a lot to offer. Those seasoned pros he already works with appreciate Luxury’s proactive outlook and outside-the-box thinking. Adamo emphasized a simple core principle at Luxury, that they want to “get loans done.” Simple as that may sound, in the non-QM space that means doing some heavy lifting and hard work to make a loan work for a borrower. He and his team do that work because they want to serve the borrower, but also because it creates a sustainable, long-term partnership with originators.

As mortgage pros refocus on their purchase pipelines at the start of a very busy year, Adamo emphasized how important a piece of non-QM lending can be for them. He shared one piece of advice that he thinks sets non-QM apart as a tool for the times.

“Speed is key,” Adamo said. “In a mortgage market with record setting volume and subsequently extended turn times, we need to be able to deliver what we do faster and better. Especially with respect to purchase transactions. We must equip borrowers with a mortgage commitment almost instantaneously. We are built for purchases here at LMC, so we are geared up and prepared to do just that.”