The conditions in today’s market have pushed non-QM to the forefront.
Borrowers need it more than ever to qualify for a home loan. Originators need it as a source of opportunity not found in another part of the mortgage sector. Non-QM is gaining speed in the market while agency is shrinking. Agency guidelines for condos are tighter deeming more non-warrantable. Fees for second homes and high balance loans have increased adding to the problem of affordability for borrowers.
These issues, and others, have made non-QM a go-to solution for originators to close loans for their clients. It’s clear non-QM is no longer a choice to add – but a requirement in many cases to save deals. Here is where it gets murky – choosing the right non-QM lending partner! So many new lenders have just jumped into the space seeing it as the best opportunity right now to make money. Do you call the AE that just brought you doughnuts? Maybe you get your own doughnut and take the time to research the right lender to take care of the most important thing besides a craving – your reputation and earning potential! Rising interest rates and shrinking agency space is cutting into volume many need to bring in each month. You don’t need your reputation to take a hit as well when you broker a loan, especially a non-QM loan. Why? Many times, these borrowers have already been turned away by another lender. The real estate agent is frustrated, the borrower is stressed, and they need someone to save the day. You don’t need to go back with any further delays or bad news. This is why it is imperative to work with an expert and leader in non-QM.
So how do you choose a non-QM lender? Start by checking off boxes that include:
1. Are they focused on non-QM? More and more lenders say they do non-QM, but how much experience do they really have? As it becomes more in demand, lenders are wanting to quickly get as much of the share as they can. The problem is non-QM is a niche market and many loans involve challenging circumstances. Fall-out loans that need saving require a lender who can quickly assess and use the right loan to close as soon as possible. There isn’t time for another delay. Experience is crucial in these situations.
2. Do they have a customer-first focus? Are they concerned about providing a smooth customer experience? You want to make sure to work with a lender that utilizes efficient technology along with strong processes designed to ensure a smooth and easy experience.
3. Do they provide a full line-up of non-QM options? Options that include Bank Statement, Jumbo, No Income Investor Cash Flow, ITIN, Asset Qualifier, and an option for borrowers with credit events. This will show they understand the full range of options that non-QM loans can provide for borrowers.
4. Can they make exceptions to guidelines autonomously? Are the lender and end investor affiliated? Or do they have to rely on approval from another investor? Have you ever received approval on a specific LTV and had that change once the investor looked at the file? That’s why.
5. Do they have a bank statement review team? Or would you be responsible for this arduous task? Knowing the income up front helps make sure you know what the borrower can qualify for before loan submission. Having this removed from your plate frees up time to focus on prospecting or servicing other clients.
6. How often do they update guidelines to remain competitive? Almost weekly? Non-QM is changing quickly and being in-touch with capital markets allows the lender to stay competitive.
7. Do they focus on your growth by offering abundant resources? Will they go so far as to present on your behalf at meetings with real estate agents or other partners? You want to work with someone who wants to help you grow.
An excellent example is this webinar that Angel Oak recently hosted.
8. Finally, their non-QM experience. Did they just start doing non-QM, or do they have a team of operations and account executives with years of non-QM experience? Wouldn’t you rather work with someone who has looked at 10,000 deals or more rather than just 10?
These are important questions to ask when choosing the right non-QM lending partner – especially in today’s volatile market. Protect your earning potential, referrals and reputation by making the right choice.
Contact Angel Oak today to learn more about its services.