Making non-QM easier

The non-QM space is attracting more attention than ever, but more can be done to make it an even more attractive proposition for originators. The key to that, according to Tom Hutchens, executive vice president of production for Angel Oak Mortgage Solutions, is using process and technology to make entering the non-QM space easier than ever.

“For the first three or four years (of operation), we had to educate everybody,” Hutchens said. “We had to let people know that non-QM was available, and we had to educate them on what non-QM actually was. Now, every single day it seems you hear about the next lender getting into the non-QM space. What we’re looking at now is technology – how to originate loans more efficiently for everybody.”

Despite non-QM’s increasing popularity, it still represents only a tiny fraction of the overall mortgage space. To change that, Hutchens said, lenders have to lower the bar for entry by making non-QM easier for originators.

“To scale this up, the loans are going to have to be done more efficiently than they are today,” he said. “We hired a chief technology officer at the beginning of this year whose sole purpose is to make interactions more efficient for the customer.”

Technology and efficient processes can show loan officers that lenders value their time – and that non-QM loans are worth the effort.

“We have to be responsible for making it easy for loan officers to close non-QM loans – because if it’s not easy, then it’s never going to become a core part of a loan officer’s business. The amount of effort needs to match the amount of volume. If only 10% of an LO’s volume is non-QM, but they expend 50% of their effort on non-QM, that’s not a good mix for the LO.”

Angel Oak is already rolling out processes and technologies to make non-QM hassle-free for originators. One of those efforts, Hutchens said, is the company’s bank-statement review team.

“That’s basically where we calculate bank-statement income up front,” he said. “That’s kind of the unknown piece in a bank-statement loan – what income can we use to qualify this borrower? So we make it known right up front. With other lenders, you have to go down the entire road, process the whole loan, submit it to underwriting, and then get your answer – and if the loan doesn’t work, you’ve wasted your time and the borrower’s time. We do it up front for that very reason.”

Angel Oak has also rolled out a proprietary software called Closing Scheduler.

“When we’ve cleared a loan to close, our originator partners go to this calendar and select a closing date and time – and then that’s what we all work from,” he said. “With a lot of lenders, it’s a constant back-and-forth just to get a closing date and time, so we built a software package that does it in real time.”

Hutchens said that although the software only rolled out last week, Angel Oak has already gotten raves from originators.

“We rolled it out last Monday, and loan officers love it – because that back-and-forth I mentioned happens on every loan, not just non-QM. But now they go click a date and time, and they’re done. There’s never going to be a situation where we say, ‘Oh, Thursday at 10? We can’t do that.’ If Thursday at 10 is available (on Closing Scheduler), it’s yours.”

Hutchens said that Angel Oak will continue to roll out features to help loan officers originate non-QM mortgages.

“That’s what we’re going to keep doing,” he said. “We’re going to keep building technologies and processes that make it efficient for loan officers to do business with Angel Oak.”