CEO says sector has proven well poised to withstand volatility
Inflation and interest rate turbulence have contributed to plenty of “choppiness” in the mortgage market so far this year – but the non-QM space is in a positive place and well positioned to weather those challenges, according to a leading industry executive.
Keith Lind (pictured), chief executive officer at Acra Lending, told Mortgage Professional America that he was especially encouraged by a strong opening four months to the year for his company, marked by a 20-25% jump in the size of its originations pipeline and fundings, despite the current market uncertainty.
Having emerged profitable in 2022 and 2023 – and with a $700-million pipeline that represents “the biggest it’s ever been” – the company is clearly doing something right, posting strong results in the face of a volatile market.
“We’ve weathered that storm pretty well,” Lind told MPA. “I think we’ve been able to play a little bit of offense, hire some seasoned salespeople that have really helped drive our business forward. And [with] consolidation, people go out of business – we’re going to get market share.
“So we’ve just been staying the course and trying to hire good salespeople when we see them and introduce ourselves to accounts that we haven’t done business with before. And it’s been working. So I’ve got to say, [in] the first four months, we’re pleased with where we’re at.”
Top of mind for Lind in navigating the market of recent times have been liquidity and expenses – two factors the executive says he never stops thinking about. Acra’s liquidity has been bolstered in the past six months by the addition of two “very large” institutional accounts, with Lind noting the perception of non-QM loans as a fairly safe bet at present helping drive business.
“I’m very comfortable with the risk. I think with the housing backdrop, very few accounts are concerned about the performance of non-QM loans,” he said. “They’re excited about the opportunity over the next couple of years.”
What brokers need to keep in mind about non-QM
Many mortgage brokers may be agency-focused and most comfortable dealing with those entities – but Lind argued that now is the time for mortgage professionals to turn their attention to the non-QM space, particularly with the institutional market going through a “tough” time and volumes sliding in many cases.
“I would just tell them if they haven’t looked at non-QM – if they don’t understand that – reach out to some of the top originators like Acra,” he said. “We’re here to help and hold their hand through the process. Because our volumes aren’t down. We’re up 20% to 25% year over year. We’ve increased the last five years every year if you take out COVID.
“So this is a growing business. The non-QM market is definitely a growing market as more and more people get educated whether it’s real estate agents or brokers.”
Federal Reserve officials have suggested that the sharp interest rate hikes over the past two years may take longer than expected to curb inflation, indicating a potential delay in rate cuts this year. https://t.co/IEzvIGjUGq#businessnews #economicoutlook
— Mortgage Professional America Magazine (@MPAMagazineUS) May 14, 2024
Investors growing in prominence among company’s clients
Lind said that when he arrived at Acra four years ago, around 25% of the company’s business was made up of investor loans, compared with 75% for bank-statement, owner-occupied applicants. In the time since, that ratio has evened out to a 50-50 split – due in large part, he said, to the perceived value and security in real estate investment compared to other options.
“More and more people, given the strength in the housing market, want to make an investment in buying investment property, maybe as opposed to doing something in the stock market,” he said, “given the volatility and what they’ve seen over the last couple of years.
“They feel safer. It’s good cash flows. So I think there’s a massive opportunity here if you’re a broker – and if you need that help, we’re here to hold your hand and teach you the product.”
For Lind, one of the strongest value propositions Acra can offer – what sets it apart in the market – is its resolve to always honour its locks and fund its loans, something he said couldn’t be taken for granted with other companies thanks to the market upheaval of recent years.
“That has been a huge tailwind for us where we built a reputation, we have a solid balance sheet, we have incredible liquidity… with almost no debt at the company,” he said.
“And with that said, I think people feel comfortable when they lock a loan with Acra. They know the loan is going to get funded and there’s not going to be any problems. And I think when you build that reputation over the last three years, because it got rocky there for the last little bit, people want to go to the companies where they know the loan is going to get funded.”
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