Get ready for non-QM’s biggest year yet

Originations are expected to grow to a new high

Get ready for non-QM’s biggest year yet
Allen Meigide

The following article was provided by LoanScorecard.

The Mortgage Bankers Association (MBA) is forecasting that purchase originations are expected to grow 9% to a new record of $1.73 trillion in 2022 – including non-QM. However, the MBA’s outlook also forecasted a 62% decline in refinance originations, down to $860 billion this year from $2.26 trillion in 2021. With refinances no longer the “low hanging fruit” brokers are going to need another product to focus on – and that’s where non-QM comes into play.

Securitizations in the non-QM market are projected to reach $25 billion in 2021, according to estimates from Dane Smith, president of Verus Mortgage Capital, and Tom Hutchens, executive vice president of production at Angel Oak Mortgage Solutions. The non-QM market share is expected to reach 10% - up from 5% in 2021.

This is good news for the millions of borrowers who don’t fit the “traditional” profile for conforming or government loans, including small business owners, self-employed contractors and gig economy workers who make up nearly 50% of the private workforce.

As non-QM lending increases in popularity, now is the time to get processes and procedures in place to capitalize on this market, capture more borrowers and grow your market share.

How LoanScorecard can help

Technology is one of the primary ways that forward-looking wholesale and retail lenders are addressing the supply/demand gap. Specialty lenders like Oaktree Funding and Angel Oak are using our technology at the front-end of their non-QM processes to help brokers and LOs quickly determine borrower eligibility.

On the wholesale side, brokers can access eligibility engines through many of the leading LOS or directly in the broker portals where brokers submit loans to the wholesale lender. They can come in, run a quick scenario, get product eligibility, and rate information, and then click a button to run the AUS, upload the file, reissue credit, and get an in-depth findings report.

Meanwhile investors are increasingly using our non-QM calibrated AUS to accelerate decision making and improve underwriter productivity. Their goal is to offer the originator and underwriter the same experience that they have with Fannie Mae’s Desktop Underwriter and Freddie Mac’s Loan Product Advisor (LPA) on the agency side, with a custom AUS on the non-QM side. Meaning they should be able to click a button, choose a program, and get findings reports detailing eligibility by each element of the program and product guidelines.

Allen Meigide has more than 25 years of experience in the mortgage software industry. He has held several senior level positions in business development, national sales, vendor management, and customer service management. His current position is managing director for LoanScorecard, a leading provider of automated underwriting and decision management solutions.