As rates rise, how are non-QM lenders faring? | ET REALITY


While mortgage rates hover around 8% for agency mortgages, lenders that handle conventional mortgages are struggling to find business.

But how are non-QM lenders faring?

According Accra Loans CEO Keith Lind, the company is currently locking up its portfolio at rates of around 9.25%.

“Our portfolio has increased approximately 24% since July and we will fund almost 23% more loans in 2023 than in 2022,” he said. “So for Accra, this has not been a problem.”

Lind said Accra’s share of lending to investors has increased from about 37% in 2022 to nearly 48% this year.

“We’re getting more mom-and-pop investors, and that tells me they have confidence in the real estate market,” he said. “I think, overall, we haven’t been that affected. “I think we are gaining market share as some of our competition falls by the wayside or struggles.”

That consolidation is a tailwind for Acra and other non-QM lenders, as some of the agency lenders that recently entered the non-QM sector are exiting the space now.

Accra is being cautious, Lind said, tightening its credit guidelines. But the company is likely to fund more loans in 2024 than this year, he said.

“I think it comes down to the fact that people want to buy homes,” Lind said. “Whether people are upgrading or maybe downgrading, people are still buying houses to live in and buying loans to invest. I think it’s a strong tailwind for Accra and the non-QM business in general.”

Non-QM Product Options

Non-QM is a smaller niche market, but benefits from having a variety of loan products and more flexibility than GSEs.

“Our investor loan process is much easier than making an investor loan through fanny mae and freddy macLind said. “If LOs are out there and thinking about what products non-QMs offer, I think they’ll be happy with how easy it is to get a DSCR (debt service coverage ratio) or investor loan through Accra pipelines. “

Acra also offers loan products for people with credit problems, foreign nationals, self-employed or gig economy borrowers, and people without a Social Security number.

“I think LOs will be surprised by all the options we can offer that Fannie and Freddie will never offer,” Lind said.

Additionally, GSEs must limit their loan balances to FHFAThe base conforming loan limit is $726,200. Lenders like Acra are not subject to this limit.

“We make loans up to $10 million, and we consistently make loans of $2 to $4 million,” he said. “That is another pocket where we are starting to see a lot more business because the regional banks that granted many of those loans had to withdraw because they do not have the balance sheet given what happened with the crisis in March. and a run on regional banks.”

Working with Accra

With these tailwinds in mind, Acra is changing its technology stack to improve the experience for lenders, brokers and borrowers, including a new pricer and a new portal.

The portal will show users where their loans are in Acra’s portfolio and in the mortgage process, and will inform them if they owe Acra any documentation. The centralized portal will also improve customer experience and allow loans to be closed faster.

“At the end of the day, this improves the customer experience for the broker, the borrower, the processor and anyone in between to make the file flow faster,” Lind said. “Communication will be more efficient, leading to a better experience.”

With the market the way it is, Lind recommends agency-side LOs become more familiar with non-QM, and working with Acra can help.

“There is business to be done on the non-quality management side, as on the agency side volumes are down,” Lind said. “They are learning the product that is not QM. If they haven’t already, I would say contact an Acra Lending account executive and we will help you learn the business and get started.”

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