Not only is it more important than ever to utilize non-QM loans to grow your business, but choosing the right non-QM lender is critical.That is because the space is growing so rapidly that more and more lenders are jumping in stating they are experts. The truth is, many haven’t been in the non-QM space for very long and not all lenders are created equal. Selecting the wrong lender to handle non-QM could result in a negative situation for your borrower and their Realtor. Choose wisely to ensure a positive experience and repeat referrals.
Selecting a lender with a proven track-record in non-QM ensures efficiency and originating quality loans. Is your lender of choice the end investor for the loan? If the answer is no, think of that in terms of efficiency. For instance, Angel Oak Mortgage Solutions is the end invest or eliminating the need to send the loan for sign-off. Another key benefit is that at Angel Oak, non-QM are the only products offered. Other lenders focus on agency business and they carry non-QM simply to say they offer the option. Do not put your non-QM borrower in the hands of anyone but a leader in the space.
Tom Hutchens, executive vice president of production for Angel Oak Mortgage Solutions says, “My concern is that with this many players getting into the space, I’m not sure that they’re all as concerned with originating quality non-QM loans.”
Conventional lenders just entering the space might consider non-QM to be a lesser focus than agency loans. Rates are down and agency business has increased. It’s possible that for them non-QM is there and they will figure it out if a borrower happens to require an alternative option.Brokers and correspondents need to trust their non-QM borrowers, such as the self-employed and property investors, with a proven entity that has the expertise to get these loans done efficiently and quickly.
SORTING THEM OUT
Asking the right questions is key when determining the right lender to trust with a non-QM deal. Here are a few key questions important to ask:
1. How much non-QM volume does your company do? If they area big, well-known lender in the agency space it’s important to know how much of their volume includes non-QM. Not much? New to the space? Consider a lender who specializes in non-QM.
2. Are they the end investor for the loan? If not, the risk exists that the loan will be sent off to an end investor to get sign-off. At times, the terms of the loan can change resulting in delay. Look for a non-QM lender who is the end investor and can get it done seamlessly and efficiently.
3. How do you handle loan-level under-writing exceptions?Understanding their comfort level in approving exceptions and if they are only used to marginal exceptions is important to know upfront. Lenders have different policies regarding approval so make sure you know how they approach non-QM in regards to underwriting.
4. Do you have a team to review bank statements, analyze deposits and calculate income for bank statement submissions? There are lenders who have bank statement review teams to take care of this process upfront so borrowers know immediately where they stand. A lender offering this service saves time and frustration.
5. Are there non-QM specific marketing flyers for available to use for promotion? Ask if flyers are available for your use to help promote non-QM using your own logo and contact information.
The fact is the non-QM space is going to continue to grow.So many people, from the self-employed, property investors, to those with credit events can’t qualify for a home loan without these products. These are credit-worthy borrowers who can prove their ability to repay the loan. Brokers who can make it happen efficiently are going to be heroes among busy Realtors needing to get to the closing table quickly. Referrals will no doubt be the end result,being known as the broker who is the go-to for non-QM deals.
The key is a non-QM partner who is an expert and leader in the space. When you go with a trusted source with a proven track record, the process is easy and quick. Your borrowers and Realtors will thank you because often, those needing non-QM aren’t sure if or how they qualify to purchase a home.It’s gratifying to help someone realize the dream of homeownership who didn’t think it was possible. And when it also grows your book of business it’s even better! Utilize non-QM and take advantage of the fastest growing segment in the mortgage industry and choose your lending partner wisely.