Slyusarchuk says when hedge funds stop buying, lenders without their own securitization program have nowhere to turn
The non-QM space continues to grow at a rapid rate. That is good news for not only existing non-QM lenders, but new lenders who have popped up to try to take advantage of this surge.
Deephaven Mortgage’s chief sales officer Tom Davis told Mortgage Professional America in December that 1 out of 4 loans in 2026 could be non-agency.
However, not every non-QM lender is built the same. While there are many well-established, well-respected lenders on the market, there are also a lot of newcomers that brokers need to do their homework on. The rate sheet a broker sees may look similar across competitors, but what sits behind those numbers can determine whether a deal closes or falls apart.
Brokers need to be aware of who owns the capital, who buys the loans, and what happens when markets get choppy. These are questions that tend to surface only after something goes wrong.
When credit tightens and outside investors pull back, lenders without their own securitization program have limited options. One non-QM executive said understanding how that works can be crucial for mortgage brokers.
Max Slyusarchuk (pictured top), founder and CEO of A&D Mortgage, said the difference between a lender that securitizes its own loans and one that depends on outside buyers is larger than most brokers realize.
"Once you securitize your own loans, it doesn't matter what happens on the market," Slyusarchuk told Mortgage Professional America. "Because the minute something goes wrong with the securitization, the market jumps, rates are off, all these investors all of a sudden say, 'I'm not buying.' So if you do not have your own access to the market, you are constantly getting squeezed every quarter."
Problems with outside investors
The buyers behind most non-QM lenders are often hedge funds, Slyusarchuk said. He said these companies can be aggressive and won't hesitate to back away from a deal that doesn't suit them.
A lender without its own securitization program is at the mercy of those buyers, he said. When volatility picks up, hedge funds tighten terms and lenders that cannot absorb that pressure start pulling back on exceptions and turn times.
"You're talking to hedge funds. They’re sharks. They want to kill you, they want to eat you alive," he said. "So if you do not have your own program, you cannot do exceptions, and you cannot have proper guidelines. It's a totally different game. You cannot be big or grow if you don't have your own program."
The deals most at risk are those that require a human decision, a guideline exception, or a quick turnaround. A lender scrambling to manage its outside capital relationships has less capacity to fight for those deals.
"You have to slow down," he said. "You take one step forward, two steps back. So you're not able to get to your maximum potential."
Advantages of vertical integration
Because A&D Mortgage securitizes its own loans internally, Slyusarchuk said it requires very little of his day-to-day attention.
"We have a team who's running securitization, and at this moment it’s just a well-oiled machine," he said. "I'm involved for two hours a month just to discuss what’s going out, and that's it. Now I'm not like having 25 buyers and this guy paying this, ‘I want this loan, I don't want this loan.’ We don't have all that."
Without constant negotiation with outside capital, the company can direct its time toward building products and technology, Slyusarchuk said. That is where the broker-facing difference shows up.
A&D recently launched its new jumbo product. Slyusarchuk said the securitization model is what makes the economics of that product work.
"It's not about the pricing,” he said. “It's really priced very well because for us it’s the quality and longevity, how long we're going to keep this person on books, and who the borrower is. Because we don't sell any loans, we securitize all of them. For us, it makes a lot of sense to have more quality borrowers in our portfolio."
A lender's capital structure, Slyusarchuk said, is the question brokers should ask before the market gets difficult, not after.
"No matter what happens, we can securitize, we can sell bonds," he said. "If it’s a little off the price, it doesn’t matter. We’re still in operation. Sometimes these hedge funds say, ‘We’re not buying.’ So the problem is that sometimes you just don't have an exit."
Stay updated with the freshest mortgage news. Get exclusive interviews, breaking news, and industry events in your inbox, and always be the first to know by subscribing to our FREE daily newsletter.
