There are a number of challenges affecting the non-QM market, but there are also opportunities. By partnering with a mortgage company that understands how to streamline non-Qm loans, brokers can close loans quickly and effectively. HousingWire recently sat down with John Jeanmonod, Regional Vice President of Sales at Angel Oak, about the company’s non-QM solutions which make the mortgage process easier for brokers.
HousingWire: Why is non-QM so important for originators to utilize in 2021?
John Jeanmonod: There are a number of factors making non-QM essential in today’s market. For one, refinance volume that has filled the pipeline for many originators over the past year is declining. It was projected in Q4 of 2020 that refinance volume would be cut in half in 2021 and we are definitely seeing the slowdown. In fact, the Mortgage Bankers Association (MBA) reports a decline in refinance applications almost weekly. Agency business alone will not bridge the gap to sustain volume growth. This is simply because more borrowers will not qualify for Agency loans.
Fannie Mae and Freddie Mac have imposed tighter restrictions making the government box smaller and smaller. They have limited the percentage of loans they will do based on criteria they have set for what they consider to be high-risk loans. If borrowers meet two out of the three risks on the list, they won’t qualify. The three high-risk scenarios are: LTVs over 90%, DTI at 45% or above, or credit scores lower than 680. This two-out-of-three elimination rule creates a bigger demand for non-QM and results in a growing number of borrowers who do not fit in the GSE box.
Originators without non-QM offerings risk losing deals and jeopardizing volume growth.
HW: Why is choosing the right non-QM lender so important?
JJ: It’s the difference between getting non-QM loans closed quickly and seamlessly versus working with a lender that doesn’t. Some non-QM lenders must get approval from outside investors that could result in delays. One of our biggest differentiators from other lenders is the fact that we are the end investor. We do not have to get approval or position anything with an outside party who could request changes and delay closings. The entire process from prequalification, underwriting to securitization occurs here at Angel Oak. We work very closely with our affiliate company Angel Oak Capital Advisors and when we say a loan is cleared to close – that’s it. We close the loan.
In addition, we don’t sell our non-QM loans to Fannie Mae or Freddie Mac. This means that we are not held to the GSE’s 7% volume cap for investment properties or second home loans. Originators don’t have to worry about whether or not we can issue these loans – we are not held to a loan cap restriction.
Working with Angel Oak Mortgage Solutions means working with the leader in non-QM. It means originators are getting the top account executives in the country and an underwriting team incomparable to others. These unique individuals know every aspect of non-QM because our main focus is on non-QM lending. These are important factors to consider when choosing a non-QM lender. Your reputation and protecting your referral base depends on the right alignment.
HW: How does Angel Oak support the broker community at the local level?
JJ: We take great pride in our efforts focused on supporting brokers in local communities. We have 70 plus account executives across the country covering local markets. We belong to and sponsor every major trade organization coast to coast and many of our account executives serve on the board. For instance, I serve on the board of directors for the North Texas Association of Mortgage Professionals (NXTAMP) and Eric Morgenson, business development, sits on the board for the Orange County chapter of the California Association of Mortgage Professionals (CAMP). We are often the preferred non-QM partner for trade shows and events across the country. Our goal is to support originators the best we can and to continue to educate on non-QM with valuable information that moves the needle for our clients. The only way to do that is to be ingrained in local communities, knowing our clients and understanding their challenges. Each market is different.
Housing Wire: What is Angel Oak doing to make the process easier for brokers?
JJ: As much as we can. We try to do the heavy lifting so our clients can focus on prospecting and closing deals. One example is our marketing flyers available for approved brokers to use. Add your company logo, contact information and download to send out. We have presentations ready to go and we are happy to present with you as the expert on non-QM at any Realtor or referral partner meeting. An integral part of the business is to grow and solidify a referral base and we can help with that through in-person presentations or webinars.
A significant time-saver for clients is our bank statement review team who will review, analyze and calculate income upfront for bank statement deals. As I mentioned before, our underwriting team is the most proficient in the business and our clients have access to them during the underwriting stage of the process.
We continue to invest in technology ensuring quick responses, information and file updates. Examples include our non-QM pricing engine QuickQuote that provides an instant answer, Live Chat, a new broker helpline and we just launched loan status text notifications.
The bottom line is this – non-QM is going to become more and more in demand. Angel Oak Mortgage Solutions is the premier non-QM lender in the space. There is no one out there like us and we have the best account executives in the industry. Don’t trust your business or your livelihood to anyone but the experts who have built a successful company exclusively around non-QM.
To prepare for this surge in non-QM, brokers need a partner that’ll support their business. Using automation and fast technology to give brokers real-time data, Angel Oak Mortgage Solutions makes the process easier.