![non qm loans meaning non qm loans meaning](https://image.slidesharecdn.com/nonqualifiedmortgage-160128200730/95/non-qualified-mortgage-nonqualifiedmortgagecom-6-638.jpg)
“You don’t really know what’s going on in the Non-QM industry because most of the players aren’t public companies,” Argus Research Senior Analyst Kevin Heal said. “Compressions have dropped to 101 from 104 – or three points – and when you’ve got all this overhead you’re trying to support, like salespeople and occupancy costs, there’s not enough margin there to support the business model,” he said.įlagstar’s text message prompts questions about the viability of the Non-QM industry, and there are different views on its health. In addition to the message from Flagstar, Non-QM mortgage lenders are facing compression on the loans they sell, said the executive, meaning profits are dropping. “There’s an advantage for them to take a deeper haircut due to the interest they earn.” “Normally it takes about 10 days before an investor buys a Non-QM loan and, during that time, the Non-QM mortgage originator is earning interest daily on the money they lent,” he said. The executive also cautioned that Non-QM mortgage lenders aren’t left high and dry after their loan is purchased. He added: “If the Non-QM lender isn’t well funded, that does put a hardship on them, not only for the Non-QM loans they’re funding but also due to the multiple loans they have to fund.”
#NON QM LOANS MEANING SKIN#
“With the haircut, it means those investors may only advance between 80% to 95% of those loans, which means the mortgage originator has to cough up more cash and put more skin in the game.” “Normally, we advance 99% of the loan amount and the Non-QM mortgage originator advances 1% of the loan,” the executive said.
![non qm loans meaning non qm loans meaning](https://images.federalregister.gov/ER30AP21.005/original.png)
![non qm loans meaning non qm loans meaning](https://gustancho.com/wp-content/uploads/2019/06/NON-QM-Loans-Versus-FHA-Back-To-Work-Mortgage-Guidelines.jpg)
Non-QM remains an important part of our business.”įlagstar’s announcement could put Non-QM lenders under financial pressure, says an executive who works at another warehouse lender and requested anonymity. “We still fund Non-QM loans and have not declined to fund any clients’ loans.
#NON QM LOANS MEANING PROFESSIONAL#
“We have always reviewed certain Non-QM loans before funding them, and we are simply adjusting this process,” Flagstar Bank spokesperson Susan Bergesen told National Mortgage Professional in an email. While Flagstar Bank, based in Troy, Mich., wouldn’t confirm whether the message was sent in response to what happened to Sprout and First Guaranty, a spokesperson confirmed the message’s authenticity. The message was shared with National Mortgage Professional by an executive who works at a mortgage lender. The message comes on the heels of Sprout Mortgage, based in in East Meadow, N.Y., shuttering its operations last week and, a few weeks prior, First Guaranty Mortgage Corp., based in Plano, Texas, laying off 471 employees, about 80% of its staff, before filing for Chapter 11. The list of investors included 16 Non-QM lenders, among them Angel Oak Mortgage and Angel Oak Home Loans, Deephaven Mortgage, Redwood Trust and Standard Mortgage Corp., to name a few. “Effective immediately – Funding advances for Non-QM loans targeted to the investors listed below will require approval in advance,” the text message said. The recent abrupt closure of two Non-QM lenders – one that shuttered its doors and another that’s now under Chapter 11 Bankruptcy protection – may have prompted Flagstar Bank’s warehouse lending division to send out a text message, saying funding advances for Non-QM mortgages will require advance approval. BY DOUG PAGE, STAFF WRITER, NATIONAL MORTGAGE PROFESSIONAL