However, sector's market share shrinks due to pandemic
Originations of expanded-credit mortgages (ECMs) saw an uptick in the fourth quarter of 2020, according to an analysis from Inside Nonconforming Markets.
The report estimates that approximately $8.5 billion of expanded-credit loans – including non-qualified mortgages and other non-jumbo non-agency loans – were closed in Q4 2020, up 3.7% from Q3 2020.
However, volume for the full year was down 28.7% to an estimated $37.3 billion due to liquidity issues caused by the pandemic.
And since it could not keep up with the production surge in conventional lending, the expanded-credit sector also lost market share. ECMs made up 0.9% of total first-lien originations in 2020, down from 2.2% in 2019.
Overall, the non-agency sector thrived last year despite drastic setbacks amid COVID-19. Since then, several non-QM lenders have resumed operations and are working hard to meet the demand for this type of credit.
“Non-QM is no longer only a fallout plan that helps you close an additional loan or two,” said Tom Hutchens, executive vice president of production at Angel Oak Mortgage Solutions. “Now is the time to build new referral pipelines by positioning yourself as a resource to other loan officers and financial services partners. Assist more borrowers by working with loan officers at large institutions and partners like CPAs to make sure they know these products exist.”
