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Exploring the Non-QM Lending Market

MReport and Altisource will explore expanding market on Non-QM lending during its next complimentary webinar at 1 p.m. CDT on Wednesday, November 20, “Non-QM Lending: Meeting the Needs of the 21st Century Homebuyer.”  [1]

Participating in the webinar will be Denis Kelly, SVP, Sprout Mortgage; Aaron Samples, CEO, First Guaranty Mortgage; Robert Senko, President, ACC Mortgage; Brian Simon, President, LendersOne. 

Samples is the Chair of the Non-Prime Lending Council (NLC), [2]who had its first meeting in September during the Five Star Conference and Expo. 

The Five Star Institute’s NLC  includes industry leaders Angel Oak Mortgage Solutions [3] and Deephaven Mortgage [4], and was formed to provide a platform for industry leaders to address challenges, promote growth, and highlighting responsible lending practices. 

Among the constant themes was that there needs to be a great deal of work and education to remove the negative connotation around non-QM lending.

"I think education was the key word that came out of today's discussions," Samples said following the September meeting. "I think big picture, it is the most important thing we need to do inside our market, and outside the market in general. I there is a hill to climb there, because there is a negative connotation still in the marketplace in terms of  what they used to call [sub prime loans] and what non-QM actually is today.”

Detailed in the August cover story of MReport [5], non-qualified mortgages represent about 4% of the total originations market in 2018, according to CoreLogic. However, non-QM mortgages have been gaining traction in the current lending environment, growing a full percentage point between 2017-2018. 

The QM Patch, and its possible expiration in 2021, will play a large role in the non-QM space moving forward. 

The Consumer Financial Protection Bureau [6] announced earlier this year that it would be focusing its attention on the Qualified Mortgage (QM) “Patch” on loans that are eligible to be purchased or guaranteed by either Fannie Mae or Freddie Mac.

While proponents of the QM Patch say that its expiration in 2021 would make homes less affordable, especially in the lower-tier housing market, an article in Forbes [7] points out that if the Trump administration wants to improve housing affordability, "it needs to expand the role of private markets through increased competition."