LOs and brokers, are you prepared for a changing workforce?

There is no doubt that 2022 has seen some serious changes in the housing market. Between far fewer refinances, rising mortgage rates and housing stock nearly halved Since 2020, loan officers (LOs) and brokers have faced a pivotal period where adaptation is essential to success. In a housing market very different from the pre-pandemic period, how can professionals in the sector position themselves to achieve growth despite these current obstacles?

When it comes to business growth this year and beyond, industry experts agree that 2022 is the year of the non-qualified (non-QM) mortgage. With nearly 50% of the workforce today made up of freelancers, gig workers, freelancers and small business owners, fewer borrowers fit the traditional mold required to obtain conventional loans . However, not all LOs and brokers are designed to support an influx of non-QM deals.

“Our squad has grown a lot in recent years. More and more people are diversifying their sources of income and choosing to work for themselves or through real estate investments. While this segment of the population may be completely creditworthy, they may not always meet the traditional qualification criteria for obtaining a home loan,” said Jeff Gravelle, co-director of production at Newrez. “As this industry continues to grow, the potential for loan officers and brokers to attract them as customers with the right kind of products also increases.”

“Non-QM loans are more challenging than other lending products, so lenders need to invest time, resources and training in their sales teams and brokers to learn the intricacies of non-QM products. This way they are better equipped to sell and serve their customers with these innovative products,” added Gravelle.

From processes and procedures to integrating the right technology stack, adapting to start offering non-QM products means first finding the right business solutions. Partnering with a team that understands how to approach home loans for borrowers with complex finances can mean the difference between another year of earnings growth and the unfortunate possibility of business loss, making this one of the the most crucial for any lender.

Preparing for the challenges of non-QM

With a forecast double its market share in 2022, non-QM products are a priority for almost every professional in the mortgage industry. As LOs and brokers prepare to expand their selection of loan offerings, it will be essential to gain a solid understanding of the products available and how best to use them for their clients. This means becoming familiar with common challenges in the non-QM market.

While adding non-QM lending options can undoubtedly become a lucrative move, the industry presents some hurdles that not all lenders are yet ready to overcome. For example, manual processing of non-QM loans can be prone to human error, reducing a company’s efficiency. With high-risk loans like non-QMs, the need for optimization should be emphasized from the start to avoid costly mistakes.

There is also the question of efficiency in relation to the increase in the cost of loans. With non-QM in a current state of transition, predicting future demand levels can be tricky. Although investing too little in additional capacity and resources may lead to difficulties in managing increased demand, the alternative could mean investing too much and having demand that does not meet expectations. In both cases, the result is far from ideal from a commercial point of view.

Additionally, managing regulatory compliance and risk management will be a big concern for lenders entering the non-QM market. Since government regulations are constantly changing, keeping up to date with and complying with these changes can become a daunting task. Juggling their own risk of compliance with the repayment capacity rule as it applies to non-QM loans means an additional element must be kept up in the air, and dropping the ball could have dire consequences. .

It is not uncommon for worthwhile investments to carry some degree of risk, and non-QM loans are no different. Fortunately, when it comes to incorporating non-QM products into your lending offerings, mitigating risk can be as simple as partnering with the right team and learning to understand the needs and trends of a new customer population.

Unique loans for unique borrowers

One of the most significant benefits of offering non-QM options is the ability to tap into a market of historically underserved borrowers. These borrowers may have already been rejected when applying for more traditional loans due to factors such as less than perfect credit, high debt ratios, low reportable income and a number of other reasons. increasingly common such as being self-employed or self-employed. workers.

Increasingly, these factors do not affect a potential borrower’s ability to repay. They are simply shut out of the home buying market because of traditional loan requirements that don’t meet their unique financial needs. From first-time home buyers to those looking for vacation or investment properties, non-QM loans come in all shapes and sizes, ideal for a variety of borrowers in a variety of financial situations.

With so many different types of borrowers beginning to turn to non-QMs for their lending needs, LOs and brokers are wise to incorporate a diverse set of lending options. This means partnering with a company that offers non-QM options tailored to meet the needs of multiple types of borrowers will be crucial for growth in 2022 and beyond.

Newrez Smart Series

Newrez professionals understand that borrowers’ needs are constantly changing and they are committed to providing a range of products that evolves with those changing needs. To meet the growing demand from unconventional borrowers, Newrez has focused on creating a series of non-QM products ready to satisfy the unique needs of a new generation of buyers.

Providing tailored products for different types of non-traditional borrowers, the Newrez Smart Series is the perfect solution for LOs and Brokers who want comprehensive loan offerings that work for borrowers who fall outside of traditional qualifying guidelines. The Newrez non-QM suite includes three different loan types, each designed for a different type of borrower.

Ideal for the independent borrower, SmartSelf is one of three non-QM products that make up the Smart Series. Ridding these borrowers of the requirement to provide a W-2, SmartSelf allows alternative income documents to qualify for a mortgage. With the number of self-employed borrowers continuing to grow, this is a huge opportunity for hopeful homebuyers who have previously been turned down due to their form of income.

Failure to meet standard agency and jumbo premium program eligibility criteria due to a credit event or isolated credit performance failure is another common reason for mortgage denial. For borrowers in this position, SmartEdge offers competitive financing solutions and a gateway to home ownership even with less than impeccable credit history.

Finally, a non-QM loan explicitly aimed at experienced real estate investors, SmartVest is perfect for those looking to purchase or refinance an investment property held for business purposes. This loan allows borrowers to purchase additional investment properties with less documentation than conventional loans. Additionally, borrowers can access equity in a current portfolio of homes to purchase additional properties or use the market rent of the subject property to qualify.

Why partner with Newrez?

To ensure long-term financial success for borrowers and investors, Newrez has designed an application-to-closing process that allows for a seamless and stress-free home buying experience. With knowledgeable non-QM underwriters with specific Smart Series training and certification, a dedicated operations team that spins the wheels behind the scenes, and the right technology to support borrowers every step of the way, the partnership with Newrez will keep customers satisfied and profits will increase as borrower needs evolve.

“We are seeing a lot of lenders who are new to the non-QM market issue their non-QM products. Non-QM lending and underwriting is a skill acquired over time with experience, as it is scenario-based lending that is very different from what any conventional underwriter is used to,” said Mike Smeltzer, senior vice president of non-QM lending at Newrez. “It’s important to choose a lender who has experience in this area and the ability to deliver with customer satisfaction. Newrez has the underwriting expertise and knowledge to deliver this type of positive customer experience.

Newrez is committed to making the lending experience painless and possible for a new kind of homebuyer with the help of its non-QM products. To learn more about the partnership with Newrez, visit newrez.com.