If a lender leverages all of these tech pieces, it can be a game changer for it in the non-QM marketplace. Additionally, it allows for transparency in pricing and closing costs for borrowers. ► A non-QM Product and Pricing Engine integrated at the point of sale. This is integral and allows LOs to qualify and price loans through an automated process similar to what they are used to doing for agency loans. With so many non-QM loans relying heavily on bank statements, easy access to those statements via asset providers will eliminate a huge pain point for both borrowers and loan officers. These integrations working together help alleviate risk for the lender by automating the information-gathering process, providing the most accurate data.
#Non qm products verification#
► A digital lending platform that is both borrower-facing and lender-facing, providing an intuitive experience. The digital lending platform should be integrated with other key mortgage technologies as well: Credit providers to enable credit pulls at the point-of-sale, asset, income and employment verification providers to allow the borrower to provide necessary documentation as easily as possible, insurance providers to quickly pull HOI into a file, e-signature and document providers to quickly e-disclose and sign documents, and payment providers to easily accept appraisal payments. Two of the most important pieces of technology or automation that lenders should be implementing if they want to be successful at non-QM include:
But just expanding the portfolio is not enough if some borrowers are going to receive a sub-par experience. Many lenders say their mission is to provide access to homeownership to as many Americans as possible expanding their product portfolio is vital to accomplishing this goal. Non-QM borrowers should also have access to the same quality level of service and experience. The mortgage borrowing experience has been greatly improved due to technology the process is much smoother and more efficient with automation, alleviating many pain points for borrowers. Lenders should use the technological advances in the mortgage industry of the last couple of years to their advantage doing so will open up entire new populations of potential borrowers.īorrowers needing a non-QM mortgage deserve the same experience as borrowers in agency products. However, automation of many processes can still be achieved for non-QM. Automation options for agency products are plentiful these days. If they dig into the data, it should tell a story about what type of non-QM products are currently the biggest opportunity.įor lenders wanting to begin offering non-QM, or for those that already do and want to be as successful as possible, the biggest area of focus should be on automation. Hopefully most lenders will have CRM data to analyze on the loans they weren’t able to fund and why.
Lenders should pick a niche based on what they have been seeing come in. Lenders looking to get into the non-QM market should focus on carving out a niche and not try to do everything and offer all possible products. No matter how great the relationship is between an LO and her Realtor partners, the Realtors will start sending referrals elsewhere if the LO is unable to help their clients. That opportunity cost can’t be overlooked. When a loan officer or lender has worked so hard to get Realtor referrals, they need to make sure they don’t lose those partnerships to the competition.
It’s easier to send buyers to a lender the Realtor knows will be more likely to get most clients approved. Realtor partners may stop sending all referrals over if their buyers frequently need a non-QM product. Lenders that don’t offer non-QM products don’t just lose the potential revenue from non-QM borrowers. While non-QM loan production has been increasing, there have been estimates that the untapped non-QM market is as high as $200 billion per year. Some examples of what makes a non-QM loan are interest only payments, Jumbo, 40-year terms or having a borrower whom is not a typical full-time W-2 employee. Non-QM loans are just mortgage products that don’t comply with the Qualified Mortgage rule but aren’t necessarily higher risk. And why not? Only offering conforming loan products leaves money on the table, in a time when margins are compressing, and additional revenue could make the difference between staying open and closing up shop for many lenders. It seems everyone is either offering non-QM products or thinking about offering them. Every other article and blog post seem to tout the rise of non-QM. Non-QM is a hot button topic in the mortgage industry right now.
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