First Guaranty Mortgage talks about how brokers can use non-QM to improve their business in 2022
The growth of the non-qualified mortgage market shows no signs of slowing post-pandemic, in a trend that’s changing market fundamentals over the long term. First Guaranty Mortgage Corporation (FMDC), a full-service lender based in Plano, Texas, has been establishing itself as an industry leader since it returned to the non-QM space in 2020.
In a recent MPA Talk podcast episode, MPA news editor Richard Torne caught up with Paul Jones, FMDC senior vice president of non-QM development and production, to discuss the challenges and opportunities brought by non-QM.
One common misconception surrounding this loan product, Jones explained, is that many people still correlate non-QM as a subprime offering
“One of the most interesting things I still find with introducing non-QM to many people around the US market is the term subprime, which we all know got a lot of people into a lot of trouble many years ago. That concept is probably the most resonating idea around non-QM today.”
Jones said that misconception is easy to help overcome. One way First Guaranty does it is through several guardrails that demonstrate the borrower’s ability to repay even though they have a lower credit score.
Read next: Changing the narrative: Non-QM vs. subprime mortgages
“We might reduce a loan’s loan-to-value allowance and require additional reserves. With that being said, there’s no chance of returning to a subprime offering because we’re looking for customers who have skin in the game,” he added.
As demand continues to heat up, Jones believes that brokers can use non-QM to bolster their business and thrive in the current high-rate environment.
“One of the biggest things that any broker can do to boost their business with non-QM is to find the proper partner who has more than just product. Every day, we’re seeing new entrants into the non-QM space. I just saw an article earlier today that discussed how this product is easy to develop today. It’s more normalized, but what do your partners with non-QM offer as far as resources? Do they have a robust training platform that gives them ongoing support to get the loan officer, and turn them into an expert in non-QM?”
You can listen to Jones talk more about FMDC’s non-QM products and training platform for loan officers who want to master the art of non-QM in the podcast, which you can access here for free.
