'Borrowers-are-not-coming-to-you' rallying cry by EVP
A recent spike in demand to learn more about non-QM products is proof that mortgage professionals are “adjusting to a new norm” where refi demand has plummeted and interest rates are continually rising, according to Tom Hutchens (pictured), executive vice president of production at Angel Oak Mortgage Solutions.
“We’ve seen a real spike in demand from loan officers to be educated. I think everyone is adjusting to kind of a new norm. The days of record low rates and easy business are gone. (That coincides) with the interest level of non-QM being high all year, even before the rates started moving up as fast and as frequently as they did,” he told Mortgage Professional America (MPA).
Hutchens made the comments just as the US housing sector’s becoming increasingly volatile. Last month, the Federal Reserve announced a 75-basis point rate hike – the biggest increase in almost three decades, sending average 30-year fixed mortgages well past the 6%-mark.
Read more: "Brokers being short-changed without non-QM"
The increase comes as originators continue to struggle to adapt to a collapse in refi loan demand, which has plummeted by a staggering 75% year over year, and with overall mortgage demand slumping to its lowest level in 22 years, according to the Mortgage Bankers Association (MBA).
In such a challenging environment, originators should educate themselves on non-QM, Hutchens stressed, adding that they needed to look beyond the established lender-to-broker relationships to win business.
He said: “Education goes beyond just Angel Oak broker or originator relationships. It’s also originators to the market and to their referral sources. That’s the request that we’re getting now.
“They’re mainly interested in non-QM education, so that they can go out and find these underserved borrowers because borrowers and business in general is not coming to them. That interest was always high, but now it’s a lot more specific and a lot more marketing related.”
Hutchens pointed out that as rates “are not something we’re really able to control”, Angel Oak was focusing on adopting a more proactive approach by providing useful tools for originators to learn how to use non-QM.
Read more: Mortgage lending plummets across US - report
He explained that Angel Oak had launched “very specific” product guideline training webinars that included instructions and advice on how to find self-employed borrowers and use bank statement loans, as well as how to search for professional investors for debt-service coverage ratio (DSCR) loans.
“Our mission has always been about education and awareness. But now education has risen to the top. During the refi boom originators didn’t have to create awareness, but with non-QM they don’t necessarily have a pipeline of past customers, so they’ve got to go find new customers,” he said.
He said the webinars had been very successful and popular among originators, noting how they were now asking more of the right questions. “We’re calling it a ‘deep dive’ into our products, and the attendance is higher than it’s ever been,” he added.
The webinars are part of Angel Oak’s latest ‘education offensive’ in a bid to generate a greater slice of the non-QM market. The Atlanta-based firm also published a concise, must-have guide for originators about the products.
Entitled ‘5 Key Steps To Win With Non-QM‘, the easy-to-read flyer provides useful tips on how to generate non-qualified loans.
It includes advice on how to boost one’s social media presence, as well as networking extensively and productively with a variety of sources, establishing a personal brand to promote the product, partnering with seasoned lenders with the relevant experience, and finding a non-QM niche for themselves.
At the time, Hutchens pressed the point that originators were not taking advantage of the marketing opportunities afforded by social media.
He acknowledged that finding the right niche in the non-QM space could be challenging, due to the fact many in the industry were not familiar with the product. To counter that problem, clarity “is key”.
He suggested originators “pick one or two of the programs” that people could understand, such as being “a self-employed bank statement expert” which would make it easier to understand for both potential clients and real estate agents.
Click here to learn more about how you can win with non-QM.
