Inventory
info icon
Single family homes on the market. Updated weekly.Powered by Altos Research
706,554-12501
30-yr Fixed Rate30-yr Fixed
info icon
30-Yr. Fixed Conforming. Updated hourly during market hours.
6.98%-0.01
MortgageOrigination

Non-QM lending inching back into the market

Handful of companies are lending outside of the Qualified Mortgage box

As a handful of states begin to ease their stay-at-home orders and allow their economies to slowly open back up, there also seems to be a slight thawing in a segment of the mortgage business that all but disappeared in March.

As the coronavirus was wreaking havoc on the financial markets and as the country was in the first phase of shutting down, many mortgage companies that focused on lending to borrowers outside the Qualified Mortgage box halted their lending operations.

But it looks like non-QM lending is staging a comeback, albeit a slight one, as several companies that halted non-QM lending in March are now back in the market.

One of the companies that has come back is Sprout Mortgage, which previously suspended funding on non-QM loans on April 1.

“Sprout is pleased that it has been able to restart lending to borrowers seeking non-QM style loans,” Michael Strauss, president of Sprout Mortgage told HousingWire this week.

“We appreciate the efforts of our mortgage broker partners and our dedicated, professional staff in getting our relaunched non-QM products into the market,” Strauss continued. “We feel fortunate to be able to conduct business while working from our homes, and we express our deepest gratitude to the first responders, health care professionals and others who are taking personal risks for the betterment of all at this difficult time.”

Another company that has re-entered the non-QM lending space is Angel Oak Mortgage Solutions, which stopped all lending in late March.

Angel Oak returned to the non-QM space with a soft launch on April 27 with two loan products: a 24-month business bank statement product and a full documentation jumbo product. According to the company, both products are available for borrowers with a 700 FICO score. Both loan programs have a maximum loan-to-value ratio of 75%.

Another non-QM lender that’s back in the space is Greenbox Loans, which sent a note out to brokers recently announcing that “Non-QM is back.”

And while those three companies have come back into non-QM lending, several of the other big names in the space have not come back yet. And it looks like that may be the case for a while, at least for one lender.

Cory Tona, owner of theLender told HousingWire this week that the company’s non-QM program is still paused at the moment. Beyond that, Tona said he doesn’t expect the company to get back into that non-QM lending “for the remainder of the year, possibly longer.”

According to Tona, there are still some companies offering non-QM loans, but “really it’s just a shell of what it used to be.”

Tona cautioned that even if more investors re-enter the space, which would give the mortgage companies an outlet to sell their loans, warehouse lenders are “not going to look at it the same way for a long time.”

As Tona said, many of the companies that previously operated in the space have not returned yet.

“We are monitoring the capital markets for non-QM very closely,” Martin Warren, managing director, specialty lending and servicing, Nations Direct Mortgage, told HousingWire. “When liquidity returns, Nations Direct will assess the competitive landscape at that time. In the meantime, we are busier than ever originating government and conventional loans at record levels.”

Non-QM is also still on hold at JMAC Lending. “Investors are going to wait to see how the pandemic works itself out and how the economy reacts in the Fall,” JMAC Lending Founder and President Christina Pham told HousingWire. “Non-QM is an important product that has served our brokers very well. When the market is back to normal and there is liquidity the non-QM products will be back.”

JMAC, like Nations Direct, is seeing record volumes in other lending areas. According to the company, JMAC had a record month in April with conforming and high-balance loans, and plans to bring back Federal Housing Administration and Department of Veterans Affairs loans in June, with full document qualification and overlays.

Orion Lending also remains out of the non-QM lending business.

“We continue to watch that space closely, and hope to begin defrosting programs once they become more available in the marketplace,” Jeremy Stewart, president of Orion Lending, told HousingWire. “Today that isn’t the case. While talk of firing up non-QM again is certainly promising, we aren’t quite there yet.”

Things are much the same at HomeXPress Mortgage. According to Bob Clafford, the company’s head of operations, lending is still on hold.

Also seemingly still on hold is Citadel Servicing, which sent out a note on March 23 that it was pausing all lending for 30 days. That note is still present on the company’s website, as of May 7, meaning that the company’s lending hold has now lasted more than 30 days. HousingWire attempted to contact the company for an update on its operations, but as of publication time, the company had not responded.

Things seem the same at Arc Home, where non-QM is not listed among the available loan options on the company’s website, but the company did not respond to a request for comment on its operations.

So, while it appears that the non-QM lending environment is beginning to open up, much like the country itself, things are not even remotely close to back to “normal” yet.

Comments

  1. Great article. Here at LoanStream Mortgage, we have been in non-prime since 2013. We are one of the firms who did not pause in March 2020. We continue to offer financing.

Load More Comments

Leave a Reply

Your email address will not be published. Required fields are marked *

Most Popular Articles

3d rendering of a row of luxury townhouses along a street

Log In

Forgot Password?

Don't have an account? Please