NonQM Continues To Grow. But where, exactly, does opportunity await?
The NonQM market, predicted to rise by as much as 400% this year, continues to be an important lending channel for many mortgage bankers. Particularly when 2020 is expected to see a slight decline in originations, finding new ways to replace volume is more crucial than ever.
A recent survey of loan officers found a significant number have seen an increase in NonQM demand.
· But where should you commit your resources?
· Where is the most fertile ground for NonQM customers?
Unfortunately, statistics on NonQM loans are not as readily available as the mountain of data that exists for conventional lending. To find your customers, lenders must interpret the data that is within reach.
That said, let’s look at two different statistics that shed some light on where opportunity waits for mortgage bankers:
Recent figures reveal that an estimated 16 million Americans are self-employed (and that number could actually be much higher); however, the self-employed are not spread evenly throughout the country. Much of the
western/southwestern/Midwest states have higher (10% or more) rates of self-employment, compared to many eastern states. Self-employed borrowers with income and solid credit, but who are lacking a traditional W-2, are good candidates for NonQM.
On a state-by-state basis, eight of the top 10 highest median listing prices are found in coastal states (Colorado and Utah are the exceptions), and while price alone doesn’t make a QM loan, a jumbo or non-agency loan is much more likely to have a debt-to-income level in excess of 43%. In fact, according to CoreLogic, between 2014 and 2018, lenders saw a three-fold jump in loans with DTIs higher than that threshold.
This opens the door to help borrowers purchase homes in high-cost regions, including coastal states, with an appropriate NonQM product.
If our NonQM products are something you would like to explore, I would welcome the opportunity to learn more about your needs and review how Reliant Bank may help your grow your business. Contact me, Rudy Orman, to learn more.
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