With non-QM and private lending expanding, finding an experienced company is critical, says 5th Street Capital EVP
As the non-qualified (non-QM) and private lending share of the mortgage market increase, so does the number of companies providing these types of loans. For brokers looking to find a non-agency solution for their clients, sticking to providers with experience will be crucial.
William Fisher (pictured top), executive vice president of production at 5th Street Capital, fears that some federal cutbacks, which may reduce lending oversight, may tempt some newer lenders to adopt more risky lending practices.
“There are a bunch of new products that have been coming out and expansions on products that have been out for years,” Fisher told Mortgage Professional America. “This is what’s called risk layering. If you risk layer properly, you’ll have a highly performing loan at a good rate. Everybody’s happy. But we have to be careful about some of the risk layering that is going to be occurring.
“Regulations may be a little more lax than we’re used to. We’ve got to be careful to police ourselves accordingly so that we can stay a very viable part of the lending space.”
Fisher notes that non-QM lending sits in the middle of the spectrum between agency lending at one end and hard lending at the other. The space it occupies is also expanding rapidly and expected to continue to grow, especially as federal programs are cut.
“There is a phrase coined by one of the folks I worked with years ago,” Fisher said. “They said, ‘When rates are low, everyone does well. But when rates are high, non-QM does fantastic.”
The non-QM market is stronger than ever, with companies raving about breaking origination records, according to Fisher.
“This tells you the strength of the market,” Fisher said. “There are still borrowers out there. As long as rates stay relatively high, there is plenty of room in the non-QM space to earn a living and do very well as a mortgage broker. Brokers have more opportunities than ever of who to choose to work with. I think that’s where it really gets interesting.”
Experience is the key in non-QM
Fisher was hired in August 2024 as the executive vice president of production at 5th Street Capital. He joined a team that has been exclusively doing non-QM mortgages since 2015.
At a time when some companies are outsourcing work, Fisher takes pride in the fact that all of 5th Street’s underwriters are in the US.
“The principles at the company are entrenched in non-QM,” Fisher said. “All our underwriters are here in America, and they've been with the company for many years. Everything's done here at our corporate office. So, we have some of the most experienced underwriters in this space. With that experience and the performance on our loans, we've been able to do things that are more unique.”
It's a challenging time for mortgage brokers and lenders, as loan applications have decreased week over week. Interest rates are now hovering around 7% once again, slowing down the housing market again. Because of the current market conditions, Fisher believes it becomes more critical to understand each borrower and their unique situation to find lending products that work for them.
“We can take a specific look at each borrower's unique situation and quickly identify if a potential exception is needed,” Fisher said. “If it makes sense, we truly do make-sense lending. I know a lot of people have said that, but everybody applies a specific expense factor to this borrower. At 5th Street, we take a much more open view of that and want to understand the borrower and their business.”
Fisher said they can decide whether a company’s expense ratio makes sense by understanding each client's business.
“There is the way we look at assets, for asset utilization, and being able to take 100% of the asset type,” Fisher said. “There is some age restrictions there on certain retirement accounts, but on other accounts, like stocks and bonds, using 100% where others might use less, going up to higher loan to value (LTV), like 90% LTV for those products, because we have a track record of performance. And these are the things that make 5th Street different.”
Not just about the best price
Fisher admits that the non-QM space can be complicated because there are so many options available to brokers and lenders. It allows them to qualify people for a mortgage loan who wouldn’t be able to do so through an agency loan like Fannie Mae or Freddie Mac.
With those two programs part of the turmoil in Washington, Fisher wants new brokers to understand the opportunities available in non-QM lending.
Marty Green of Polunsky Beitel Green sees Fannie Mae’s workforce cuts as part of a broader push by the Trump administration to prepare GSEs for privatization and reduce DEI-related programs.https://t.co/JmWGYmWBFU
— Mortgage Professional America Magazine (@MPAMagazineUS) April 15, 2025
“If you happen to be a broker who's new to the space, working with one who has experience under their belt to help you get your loan funded,” Fisher said. “Show you, with an educated account executive, how to get that loan through, and how to structure it up correctly.”
When working with new brokers, Fisher explains how sometimes brokers and customers can get lost chasing the best rate when they can’t get a closed loan at that rate. He notes that’s where an experienced non-QM company like 5th Street Capital can help.
“It's not just about the best price. I mean, price is important, and everybody understands you’ve got to be as close to the bleeding edge. But if the loan can't get done at the best price, then what's the point? At certain points, you have to be able to get the borrower into the home if they're deserving of it.
“Depending on the loan, an eighth or even a quarter of a point doesn’t really change the payment all that much.”
Fisher encouraged brokers interested in entering the non-QM space to find a company with the experience to guide them through the process and create a platform that is as user-friendly as possible.
“Those are the things I would think anyone who hasn’t gotten into non-QM yet should be thinking about,” Fisher said. “Do (these companies) have the experience? Are they going to be here tomorrow? Have they been here for basically 10 years, doing non-QM? Bolster that with a good platform that’s easy to use, and it makes a difference. It makes a much more pleasant transition if you’re new to non-QM.”
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