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Why Non-QM Is Still Essential

The COVID-19 pandemic shook the foundations of the US economy, and one of the early casualties was non-QM lending. The sector, which had been growing at an exponential rate, dried up seemingly overnight in March as several non-QM lenders temporarily halted originations.

But non-QM is already making a comeback. And according to Tom Hutchens, executive vice president of Angel Oak Mortgage Solutions, it’s still a product that every originator should have in their toolkit – especially as the COVID-19 crisis abates.

“We’ve always thought about non-QM as self-employed business owners and bank-statement loans – but there are also going to be people who’ve run into some credit challenges, some financial challenges, but they’re okay,” Hutchens told MPA.

And for those borrowers – the ones who’ve been financially impacted by the COVID-19 crisis – non-QM products can be a godsend, Hutchens said. “As we get out of this, there are going to be some people who’ve had some damage done to their credit and to their finances. But they’ve recovered, and they want to buy a home, or do a cash-out refinance on their house. There are going to be a lot more of those in the near future. To me, that’s pretty obvious.”

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