Home loans backed by Fannie Mae and Freddie Mac get most of the attention in the mortgage market. However, savvy brokers know that not all borrowers fit into the strict requirements of Fannie and Freddie.
Most housing economists expect mortgage rates to rise in 2022. The Mortgage Bankers Association’s forecast calls for the average rate on a 30-year loan to reach 4% by year’s end. If that prediction proves true, the traditional refinance business will all but disappear.
The best alternative is non-QM mortgages—designed for borrowers who don’t meet traditional underwriting guidelines. Fortunately for the mortgage industry, non-QM loans, with their more flexible guidelines, are poised for robust growth in 2022.
Borrowers in the non-QM category include creditworthy borrowers such as self- employed business owners, property investors, foreign nationals, borrowers purchasing non-warrantable condo or condotels, and borrowers with multiple streams of income including significant assets. This category of borrower relies on, but is not limited to, alternative documentation, including bank statements, assets, and rental property cash flow.
In a classic example, a seasoned real estate investor might not qualify for a conforming mortgage.
Property investors typically own multiple properties and are continuously looking to add to their portfolio. While most have very strong cash flow, their reportable income usually shows them breaking even or losing money, leaving conventional lenders unable to verify and use income.
In another example, a business owner has positive cash flow in their bank accounts. However, their tax returns don’t reflect that, and instead report high levels of expenses. That’s a smart move in terms of tax planning, but it’s another way that borrowers can knock themselves out of contention for traditional mortgage underwriting.
As the share of self-employment rises in the United States, borrowers increasingly seek out non-QM loans, and lenders are cranking up the flow of non-QM financing to match that rising demand. HousingWire reports that non-QM securitization deals totaled $21 billion through the first 11 months of 2021, eclipsing the $18 billion in non-QM mortgage securitizations in 2020 (Conroy, 2021).
Why now is the time to look to non-QM loans
This is the perfect time for brokers to enter the non-QM market. The opportunities in this sector of the mortgage industry can help you keep your application flow and pipeline strong.
Non-QM loans are a specialty market, so it’s important to work with a company that can demonstrate expertise, experience, and the kind of quality customer care that you and your clients deserve.
LendSure has worked exclusively with non-QM products and has built a track record of success in this field. Partnering with LendSure will allow you to provide your creditworthy borrowers with loan programs that they otherwise would not qualify for through conventional methods.
LendSure’s exclusive pre-underwriting process goes beyond a simple prequalification. An experienced, in-house professional reviews each submission and provides common-sense approvals and pricing, typically within 24 hours. You can say “Yes” with confidence, knowing that LendSure minimizes, if not avoids, surprises down the road.
To get started offering these lucrative programs, contact your LendSure Account Executive today.
Conroy, B. (2021, December 10). Move over Fannie, the non-QM loan is in the fast lane. HousingWire. https://www.housingwire.com/articles/move-over-fannie-the-non-qm-loan-is-in-the-fast-lane/