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The Role of Non-Prime Wholesale Mortgages in Combatting Falling Homeownership Rates Due to Foreclosure

Though homeownership remains a core part of the American dream, homeownership rates are falling. One of the causes of this fall in homeownership is foreclosures. As homeowners going into foreclosure have difficulty obtaining mortgage loans for many years after bankruptcy, a case is made for top wholesale providers to explore alternative lending programs, offering residential mortgage financing to non-prime buyers. A drop in homeownership rates indicates opportunity for wholesale mortgage lenders willing to fill this void in the market.

Of course, a lack of non-qualified wholesale mortgage products is not the only cause in the drop of homeownership. Homeownership, at its lowest point in 50 years according to the US Census Bureau, is decreasing while home prices rise. Home owner demographic analysis shows concentrated falls in home ownership rates among millennial home buyers as well as many racial and ethnic groups. Subprime mortgage borrowers that are currently unable to take advantage of the low interest rate environment will later experience higher mortgage loan volumes with now ballooning home values. Interestingly, homeownership rates actually started falling right before the recent economic recession. During this period, subprime mortgages provided opportunities for responsible home buyers to obtain non-prime mortgage loans, and non-conforming wholesale mortgage brokers assisted creditworthy non-agency mortgage borrowers to finance their American Dream. As homeownership rates dropped as early as 2005 and 2006, years before economic difficulty, top alternative lending programs should not be blamed for providing access to alternative mortgage wholesale loans.

David Crowe of the National Association of Home Builders explained that homeownership was “falling because we are not getting new entrants into homeownership.” Stricter lending guidelines, a lack of non-prime mortgage financing products available to the general public, and soaring residential real estate prices compound the problem of mortgage loan volumes. Top non-prime wholesale originators saw the need to provide non-qualified mortgage wholesale products, presenting non-traditional financing options to mortgage brokers in search of home loans for their borrowers. Borrowers with a lower credit score or a recent housing event (like a foreclosure) find it extremely difficult if not impossible to obtain a mortgage loan through most residential mortgage lenders, making mortgage fallout solutions from wholesale mortgage lenders all the more necessary. If brokers do not find an alternative solution for their borrowers who may not qualify for Agency loans, a large segment of potential homebuyers will remain unable to buy homes.
As daunting as falling homeownership rates may sound, especially when correlated with foreclosure, this actually presents opportunity for non-prime wholesale originators. Homeownership still remains one of the most popular ways for the majority of the population to build equity and wealth. Because of this, non-QM wholesale mortgage originators need to provide ample alternative lending programs to alternative mortgage borrowers, in effect combatting the trend of falling homeownership. Residential mortgage lenders who utilize top alternative wholesale mortgage originators expand the economy and improve homeownership across the nation. By providing alternate sources of mortgage financing, creditworthy non-prime mortgage borrowers gain access secondary mortgage financing products for their home.

Angel Oak Mortgage Solutions offers a number of non-prime wholesale mortgage solutions for low credit borrowers.