Top markets for affordable renovated housing inventory

Despite the rapidly deteriorating affordability, there is some hope for homebuyers in the form of renovated homes: properties that have been rehabbed into move-in ready condition after being purchased at auction.

HousingWire Magazine: December 2021/ January 2022

AS WE ENTER A NEW YEAR, let’s look at some of the events that we can look forward to in 2022. But what about what’s next for the housing industry?

Mortgage Tech Virtual Demo Day

Tune in to our live Virtual Demo Day on December 1st at 10am CT to experience demos from the most innovative tech companies in the Servicing, Audit and Post-Close space.

Logan Mohtashami on Omicron and pending home sales

In this episode of HousingWire Daily, Logan Mohtashami discusses how the new COVID variant, Omicron, will impact inflation and whether or not it will send mortgage rates lower.

Politics & MoneyMortgage

Is non-QM lending the future of housing?

Lenders begin offering non-agency products

Lenders are starting to look into the unchartered territory of non-QM lending, seeing that it’s been over six months since the CFPB Qualified Mortgage requirements went into effect. And while it’s not vast, there is a definite demand.

Growth in the non-conforming market is needed since there is little new product development taking place with the agencies, said Chris Garagusi, vice president of mortgage capital markets product manager at BOK Financial Mortgage (BOKF).

“As such, there is a continued need to develop non-conforming products that fit specific borrower needs (QM and non-QM),” he said.  

He also noted, “As agency [Fannie and Freddie] guarantee fees have increased over time, the pricing spreads between conforming and non-conforming have compressed from historical levels and in some instances non-conforming pricing is actually better than conforming pricing.” 

There is currently $50 billion estimated in non-QM volume origination a year, which should create a significant net demand for private label mortgage-backed securities and whole loans, according to Ying Shen and Richard Mele, research analysts with Deutsche Bank [DB].  

However, they don’t expect non-QM volume to rise significantly above the $600 billion mark, and instead, given the dominance of GSE and FHA/VA and the exemption under the ATR/QM rules, the non-QM market is expected to be small.

Both also expect that non-QM loans will more likely be originated for prime high net-worth homeowners, which is what lenders are doing.  

“Most of our expansion with non-agency products has been in the jumbo arena.  We continue to evaluate non-conforming product opportunities in the marketplace and expect to bring several to market in the near future,” Garagusi said.

Meanwhile, Impac Mortgage (IMH) is also breaking into the non-QM market, offering 4 new products:  Alt-QM Jumbo, Alt-QM Agency, Alt-QM Income and Alt-QM Investor.

“We believe there is an underserved market for these programs where certain borrowers are finding financing for purchase or refinance is either non-existent or available with stringent and costly parameters,” Bill Ashmore, president of Impac Mortgage, said.

“We are not new to the non-agency space,” Ashmore continued. “We think this market is very similar to what we saw in 1995 when we first created Alt-A loans, and subsequently originated to $90 billion in that product from 1995-2007.”

In addition, back in June, Caliber Home Loans rolled out four types of new non-agency mortgage products.

“We are confident that our prudent underwriting guidelines, coupled with the way we have structured each of these products, creates a winning combination for both Caliber and the customers we serve,” said Joe Anderson, CEO of Caliber Home Loans. 

Most Popular Articles

FHFA: Government to back mortgages up to $970,800 in 2022

The FHFA today announced the baseline conforming loan limit for 2022 will be $647,200, an increase of 18%. In high-cost areas, the new ceiling loan limit will be $970,800.

Nov 30, 2021 By

Latest Articles

Fannie Mae revs up its credit-risk transfer machinery

Fannie Mae is once again back in the credit-risk transfer market with a $984 million note offering through its Connecticut Avenue Securities real estate mortgage investment conduit

Dec 02, 2021 By
3d rendering of a row of luxury townhouses along a street

Log In

Forgot Password?

Don't have an account? Please