Non-QM lenders seek LOs as direct-to-consumer model collapses


“If you don’t have experience in quality management, we can onboard you directly, you’ll get a job right away,” he said. “If you’re willing to learn and you’re coachable and trainable, that works too.”

Kidwell said his company is looking for loan processors to identify fraud in non-QM loans, in addition to loan officers.

The hiring trend at non-QM lenders contrasts sharply with recent layoffs at some direct-to-consumer lenders, which specialize in conventional refinance loans. These last months,, Interim mortgage and Wyndham Capital Mortgage announced layoffs of loan officers. With the three companies combined, more than 1,000 employees received pink cards.

Acra Lending, which has changed its name Citadel Upkeep Last year, has more than doubled its headcount year-over-year, from 200 employees to 420 in 2022. Keith Lind, president of Acra Lending, said that in a few months the company will have more than 500 employees.

“The area of ​​focus for us right now is OL hiring,” Lind said.

Riches in niches

the Mortgage Bankers Association forecast mortgage lending to grow 9% to $1.73 trillion in 2022. Non-QM lenders are optimistic that lending outside the jurisdiction of government-sponsored companies will propel this growth.

In a recent interview with HousingWire, HomeXpress, a non-QM member lender, predicted the industry will double its market share in the coming year, from 5% in 2021 to nearly 10% in 2022.

One reason the non-QM sector is set to take off, non-QM lender executives say, is that self-employed borrowers and those working in the gig economy need homes. Current GSE guidelines make it difficult for borrowers who don’t have a traditional salary to qualify for agency-backed loans.

“I think there are so many independent borrowers who have felt like they’ve been kind of stuck with only being able to do one type of loan for so long and they’re just now finding out that non-QM might be an option for them,” Kidwell said. “I would say most of our customers didn’t even know non-QM was an option two years ago.”

Kidwell also said real estate investing is another segment that is driving more business toward non-QMs. “I would say at least 30% to 40% of our clientele are real estate investors,” Kidwell said.

the Federal Housing Finance Agency recently announced new upfront fees for second home loans which, like the steep and now suspended caps on such loans last year, are expected to give the private label market a boost.

And as rising mortgage rates slow the flow of refinances, lenders are bracing for increased interest in non-QMs. Alex Naumovych, an LO at Draper and Kramer Mortgage, said senior management at his company urged LOs to think more about non-QM programs in 2022.

“In 2020 and 2021, there was so much refi volume that no one really had the time and patience to handle these types of loans,” Naumovych said. “This year, everyone will also have a little more time, they will provide a little better service and pay more attention to these loans.”

Non-QM loans, Naumovych noted, take longer to originate because they don’t go through an automated underwriting approval process like GSE-backed loans do.

Some market participants are also watching closely for regulatory changes that could dampen the non-QM market by expanding the pool of loans that can obtain QM status.

the Consumer Financial Protection BureauQM’s new general final rule replaced the 43% debt-to-income ratio limit in favor of more flexible pricing guidelines, allowed jumbo loans to achieve QM status, and provided additional means to verify income or assets. The new rule is expected to be implemented on October 1, 2022.

Redwood Trust, in a report published in April 2021, noted that if the rule is implemented, “the increased flexibility will likely result in loans that would previously be considered non-QM qualifying as QM in the future…a corresponding reduction non-QM loans will follow.”

Regulatory uncertainty hasn’t diminished Lind and Kidwell’s confidence in the non-QM sector, however.

“I learned a long time ago not to worry too much about these things,” Kidwell said. “The riches are in the niches.”


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