August 26, 2019
Non-Qualified Mortgages (non-QM) are still a small part of the overall mortgage origination market. They represented only about 4% of the total originations market in 2018, according to CoreLogic, yet, in the current lending environment, this segment has seen much more traction, expanding a full percentage point between 2017 and 2018. And their popularity continues to grow.
A recent Standard & Poor’s (S&P) report indicated that the segment has gained significantly from the time that non-QM was introduced in the market. In fact, it was the fastest growing market in non-agency residential mortgagebacked securities in September 2018 and was on track to double or even triple in size this year.
“We’re seeing a lot more non-QM products and similar types of loans coming to the market,” Jeff Taylor, Founder and Managing Director of Digital Risk, told MReport earlier in 2019. “People are looking to expand their credit box and see what types of different loans they can put in the marketplace and what the appetite might be from the investor base.” He added that, “the higher the interest rate, the higher the payment, the more risk tolerance people will be willing to take from a non-QM type loan, and the expansion of these mortgage products into different areas.” However, the path hasn’t been an easy one for non-QM products, which are often compared to the subprime loans of the 2000s.
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