Alex Carlucci The Mortgage Expert,
Publish On: October 20, 2020
BREAKING NEWS: The Impact Of The Coronavirus Outbreak On Non-QM Lender
The Impact Of The Coronavirus Outbreak On Non-QM Lenders hit the mortgage and housing industry hard: All non-QM mortgage companies have halted funding mortgages. Many have already gone out of business. Non-QM loans are alternative mortgages that have been becoming very popular. Many non-QM mortgage companies have enjoyed explosive growth since they hit the mortgage markets in 2012. Non-QM loans offered borrowers who could not qualify for traditional government and conventional loans an opportunity to qualify for a home loan. This holds especially true for self-employed borrowers and those who recently had bankruptcy and/or foreclosure. There is no waiting period after bankruptcy, foreclosure, deed in lieu of foreclosure, short sale to qualify for non-QM loans.
In this article, we will discuss and cover The Impact Of The Coronavirus Outbreak On Non-QM Lenders.
The Impact Of The Coronavirus Outbreak On Non-QM Lenders And Its Future
The impact of the coronavirus outbreak on non-QM lenders is beyond devastating:
- This is not just a few lenders but the whole non-QM mortgage industry
- Many borrowers, as well as loan officers, are asking whether or not if the non-QM mortgage market is disappearing as these lenders stopped taking on new loan applications two weeks ago
- The financial crisis due to the coronavirus pandemic has affected the mortgage markets due to liquidity
- The Non-QM lending market is a huge sector outside the Qualified Mortgage industry
- Countless established non-QM lenders have closed their doors last week due to the market chaos and liquidity issues mortgage lenders will be facing
- Many face potential bankruptcy while others suspended their operations for two to four weeks
As of today, the only non-QM lender that is originating, processing, and underwriting non-QM mortgages are Sprout Mortgage. However, Sprout is not funding any loans until further notice.
Is The Non-QM Lending Markets Gone?
Many are asking whether the non-QM lending markets have disappeared and/or will disappear like the 2008 subprime mortgage crash. The answer is “we do not know yet.” Deephaven Mortgage, one of the first lenders in the non-Qualified mortgage market has announced they are laying off all workers and closing all operations as of last week. Many borrowers who have their files in processing and underwriting at Deephaven are now in limbo and cannot close their loans. Deephaven borrowers need to find another lender and start the process all over. However, we do not know of any other non-QM lenders that are operational.
Most have gone out of business and/or suspended their operations indefinitely. Another major player in the non-Qualified mortgage market is Angel Oak Mortgage Solutions. Angel Oak has laid off 90% of its workforce as of last Friday. The company has suspended all operations for at least two years. It may be longer. The company said that they still plan on being in the non-QM mortgage lending market but need to restructure their business model. This is dependent on how the financial markets will do during the coronavirus pandemic. Citadel Servicing is another non-QM lender that suspended its operations but said they plan on being in business. Angel Oak plans on adjusting mortgage rates and pricing and restructuring its guidelines if the company proceeds with operations after a two-week waiting period.
Statement From CEO Of Angel Oak Mortgage Solutions
So Citadel Servicing statement seems more promising than Angel Oaks. Will non-QM loans still be here to say? Or will it disappear as subprime loans did after the 2008 financial crisis? This is a developing story. Gustan Cho Associates will keep our viewers with new developments in the coming days and weeks.
UPDATE ON This BREAKING NEWS ARTICLE ON The Impact Of The Coronavirus Outbreak On Non-QM Lenders was updated on November 5th, 2020. Gustan Cho Associates have reopened all of our non-QM loan programs. Gustan Cho Associates have even added new non-QM loan products. All the non-QM mortgage loan programs that were suspended and/or canceled have resumed. Gustan Cho Associates offers one day out of bankruptcy and/or foreclosure non-QM loans, 12-month bank statement loans, asset-depletion, and P and L only investment property loan programs. We will be writing about our newest non-QM loan products in the coming days and weeks.
