Angel Oak breaks records in Q3

As non-QM heats up, Angel Oak is leading the charge

Angel Oak breaks records in Q3

Mortgage rates topped 5% for the first time since 2011 last week, and traditional lenders are feeling the pinch. Non-QM, however, is experiencing a renaissance – and Angel Oak Mortgage Solutions is helping to lead that charge.

“The non-QM space is a subset of the overall market and is continuing to grow and hire and prosper,” said Tom Hutchens, executive vice president of production at Angel Oak. “Angel Oak just finished a record third quarter -- $664 million in non-QM originations.”

That represents an increase of 30% from the second quarter and a year-over-year gain of 153%, Hutchens said. So far in 2018, Angel Oak has posted $1.5 billion in non-QM originations. The company has also been named the largest nonbank originator of expanded-credit mortgages – which includes non-QM – for the first half of 2018, at $849 million.

Hutchens said that in the current rising-rate, low-inventory environment, non-QM products are more important than ever.

“I think what’s happening on our end is that people are no longer thinking about whether or not they want to offer non-QM – now they’re deciding who they want to partner with in the non-QM space,” he said. “We think that’s the most important decision an originator can make, because you really have to choose the right partner.”

Angel Oak has built itself on a foundation of service to keep originators coming back, Hutchens said.

“We’ve built our whole model around service. We eat, sleep and breathe it every day, because we understand that for originators to be active in the non-QM space, they have to be really confident in who they’re partnered with,” he said. “We understand that if we don’t provide good service, we don’t grow. And non-QM is all we do so our employees are laser-focused on providing an elite level of service to our origination partners.”

Originators who’ve partnered with a good non-QM lender can use those products to set themselves apart from the competition – something that’s especially important as the year winds down and homebuying slows, Hutchens said.

“The successful originators are using the non-QM products and programs to differentiate themselves. As they go into the end of the year, if they can go out and capture some referrals and build some relationships, they can set themselves up for a good 2019,” he said. “That’s what the good originators are using the non-QM products for – to build those referrals and relationships. Throwing in the towel and saying, ‘Well, it’s the holiday season; nothing’s going on’ – that’s really not a good strategy.”

At bottom, Hutchens said, non-QM isn’t just a nice product to have in your mortgage toolbox – it’s increasingly a necessary one. Non-QM isn’t just important for attracting new business – it’s becoming vital for retaining good LOs.

“Any company that’s not aggressively getting into the non-QM space also risks losing loan officers.” Hutchens said. “Loan officers are aware of non-QM products, and if they feel their company doesn’t give them all the tools they need to succeed, they’re going to look somewhere else.”