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What Happened to Jumbo Non-QM?

What Happened to Jumbo Non-Qualified Mortgages?   

All of the jumbo non-QM products evaporated by late March 2020, due to investors concerns of instability in the secondary market created by the Covid-19 global pandemic. This episode was a haunting experience for those in the non-QM loan market as it resembled the 2008 mortgage crisis. 

Pipelines of non-QM loans had no chance of funding. Most reputable non-QM lenders sent their customers a formal statement with an apology and letters of explanation for their decision to exit the market. The actions were very little help for the Account Executive's relationship with the mortgage lender or the mortgage lender's relationship with their customer. 

Presently, non-QM investors have re-emerged with an appetite, non-QM loans are back. However, they are back with more stringent program guidelines. The "make-sense" underwriting policies have changed to "make-sure" underwriting policies. 

IMN provided an informative Q&A video on today's non-QM market with Tom Hutchens, EVP of Production, from Angel Oak Mortgage Solutions. Tom explains the non-QM loan product and the current market for them in this video. 

Non-QM  loans are available when a borrower's income varies from month to month. Borrower's bankstatements may be used to support income. W-2's, and 2 years tax returns verified by 4506T, are required for all (QM) qualified mortgages. 

The non-QM loan doesn't conform to the consumer protection provisions of the Dodd-Frank Act. Welcome to the mortgage lending business where the golden rule is "Those with the money make the rules."

 It is all about the lines of credit and the investor's appetite for non-QM loans. These complex loan products are great for their intended purpose and provide interest rates that compete with QM loans. Get them while you can, because they could be gone tomorrow.   

Ask JumboMac any loan scenario question or any question! We will cover "Jumbo" non-conforming loans in next week's blog. Do you know the jumbo loan amount limit in your County?  


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