Parkison says outdated perceptions, not the product itself, are the real problem
Rising mortgage rates, changes in agency loan qualifications, and an increase in borrowers with more non-traditional income sources have pushed more mortgage customers into non-QM loans.
Non-QM lending has become a larger part of the mortgage business as more borrowers bring income that does not fit neatly into a W-2. Despite that growth, there are still brokers who haven’t fully explored these loans, in some cases due to misunderstandings about what non-QM loans are.
One lending executive says that growing volume makes the reputation problem more costly, since it has little to do with how the loans actually perform and everything to do with outdated messaging that never caught up with the product.
Michelle Parkison (pictured top), senior vice president of capital markets at AD Mortgage, works directly with the loan products at the center of that shift. She said closing the perception gap around non-QM has been a deliberate focus for her company.
"People think of agency loans as fast, streamlined. I can do it. It's not as daunting as non-QM," Parkison told Mortgage Professional America. "We really wanted to change that messaging. There's still some lack of education out there among some originators who think non-QM is ‘a bad loan,’ and it has nothing to do with that."
Changing the messaging
Non-QM loans made up more than 11% of total rate lock volume in August, up 1 percentage point from the previous month and 3 percentage points from a year earlier, according to Optimal Blue’s August 2026 Market Advantage mortgage data report released on Tuesday.
According to the report, investor and debt service coverage ratio loans accounted for more than 35% of that non-QM production, while bank statement loans made up nearly 30%.
Parkison said part of the challenge has been convincing originators that agency loans and non-QM loans are simply built to serve different borrowers, not that one is inherently safer than the other.
"Making the process similar to agency was a concerted effort," she said. "The agency is a particular box, which is there to support a certain type of homeowner. It doesn't mean, with all the different non-W-2 income out there, that there isn't more of a space for non-QM as our economy changes."
That space, she said, is likely to keep expanding as more borrowers bring income that doesn't fit a traditional W-2 model. Freelancers, contractors, and small business owners have become a steadily larger share of today's homebuyers.
"Non-QM is becoming more routine," she said. "Helping out with our AUS and other types of initiatives that bring in technology and AI helps us do that."
Building the technology
Closing the perception gap requires more than messaging. Parkison said it’s important for companies to build out technology and AI to give brokers and homebuyers the same experience with a non-QM loan that they’re getting with an agency loan.
"For companies, I think they should allocate time and resources to research new technology options," she said. "There's a lot of different options, and they're coming up frequently, and today's shiny object might be different than tomorrow's shiny object. Having a team or dedicating resources into researching it is really important."
For AD Mortgage, that research allowed it to create tools that mirrored what borrowers and brokers are used to with Fannie Mae or Freddie Mac.
"AD Mortgage was the first to build out a non-QM AUS, an automated underwriting system," she said. "Non-QM has become a bigger percent of originations in mortgages, and it took good research and decision-making for us to prioritize this brand-new technology. We're happy to have done it. Look at all the options out there and what works best for you in your business."
Parkison said the biggest challenge for everyone in this rapidly changing technology environment is to figure out exactly what areas of business need the most attention.
"Once researched and understanding how this new technology option will help you, time then is spent building out the technology and incorporating it into everyday workflow," she said. "It can be challenging to understand where to prioritize your resources."
Brokers share some of that responsibility as well, according to Parkison, rather than waiting for lenders to make the first move. That means doing their own homework on which technologies and which lending partners actually follow through on that promise.
"On the broker side, making sure that they're utilizing technology, whether it's just for research purposes for AI, and that they’re working with lenders who prioritize AI,” she said. “That’s what brokers can do to help themselves.”
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This article is part of our Monthly Spotlight series, which in September focuses on investor-focused loan products. Full coverage can be found here.
