Experts explain why
The demand for non-QM loans seems to be shrinking along with the housing market. Because of this perception, a handful of lenders and bankers have exited the non-agency space. But it’s all a huge misconception, Deephaven chief sales officer Tom Davis said.
“Big misconception. A lot of brokers or bankers will say, ‘I don’t really run into these borrowers,’” said Davis. “That’s because they’re not looking for them. But just like agency borrowers, there are non-QM borrowers in every single town, and there are investors, credit event borrowers, there are first-time homebuyers.”
Davis, along with LoanStream Mortgage’s Will Fisher and Acra Lending’s Nick Harvey, dispelled these myths during MPA’s latest non-QM power panel.
Fisher believes there is a need to expand the definition of a non-QM borrower.
“You know, interest-only is something that’s unique to the space,” he continued. “And so, you’ll see that there’s probably borrowers that maybe haven’t refinanced during the boom or maybe didn’t get the best rate they possibly could during the boom. But now, with interest-only and other more expansive terms with interest-only, we can still lower their payment to some degree, whether they’re just a regular W-2 worker employee or self-employed – especially for self-employed, as they have a tough time showing their income.
“So, with bank statements and then investors, it’s still a fantastic time of year trying to create cash flow and look at those opportunities. And so if you haven’t moved forward yet or you’re just not going to work in that agency model, then non-QM is a perfect fit for you with when you can get an agency and what you can get in QM being so close now. You’ve got to consider non-QM as a viable play to get your loan forward, especially if it’s an interest-only payment.”
Harvey added: “There are tons of products that we all offer in the non-owned space. But really, those borrowers that aren’t qualifying for that conventional paper - really drive them to us. Also, a lot of investors right now - those no income, no ratios or fix and flips and multifamily - I think there’s much to offer for all those borrowers.”
Watch the full interview here: Non-QM Power Panel - Thriving amid the turmoil