Angel Oak Home Loans will exit its retail distribution channel following a sale of its retail offices to an unknown lender and servicer. The firm will focus on the non-qualified residential mortgages in the wholesale and correspondent channels.
“Angel Oak is exiting its retail distribution channel and divesting its retail distribution capabilities housed in Angel Oak Home Loans, entering into a transaction with a leading mortgage lender and servicer,” a statement from Angel Oak said. “The transaction includes an acquisition of Angel Oak Home Loans’ brick-and-mortar retail offices and associated salesforce.”
Details of the deal were not disclosed.
The transaction follows Angel Oak Home Loans slashing 15% of its workforce, or 57 employees, in October. The lender originated $2.32 billion in volume in the last 12 months through 156 active loan officers and 39 branches, according to mortgage data platform Modex. Of the total volume, conventional loans accounted for 85.7% and purchase mortgages accounted for 53.6%.
Angel Oak intends to focus on the non-QM residential mortgage sector through its wholesale and correspondent channels, the company said. “Angel Oak Home Loans will continue to be a part of Angel Oak Companies post transaction and will house the correspondent and consumer Direct channels.”
Angel Oak’s companies specialize in non-qualified mortgage (non-QM) loans, which aren’t government-backed and ineligible for purchase by Freddie Mac or Fannie Mae. As a result, these loans present a greater risk and typically come with higher interest rates.
The pool of non-QM borrowers includes real estate investors, property flippers, foreign nationals, business owners, gig workers and the self-employed, as well as a smaller group of homebuyers facing credit challenges, such as past bankruptcies.
The transaction has zero impact on the wholesale non-QM originator Angel Oak Mortgage Solutions, Angel Oak Correspondent Lending or any other Angel Oak affiliates, the company added. In late September, Angel Oak Mortgage Solutions cut 20% of staff, or 75 employees, citing “the current economic environment that has challenged the entire mortgage market.”
Angel Oak Mortgage Solutions is among the largest nonbank originators of non-QM and specialized mortgage solutions in the country, working through brokers and correspondents. Angel Oak Mortgage Solutions originated roughly $5 billion in volume between July 2021 and July 2022, the company said.
As rates rise, lenders are struggling to sell in the secondary market as investors are seeking higher yields. This liquidity problem caused non-QM lenders including First Guaranty Mortgage Corporation and Sprout Mortgage to abruptly shut down.