Changing the narrative: Non-QM vs. subprime mortgages

Although that still depends on who you’re talking to, said Acra Lending president Keith Lind.

“I think institutional investors that we speak to understand the difference between a loan originated today – if you want to call it non-QM or some sense of a private loan versus what was being done in 2008,” he said. “The majority of those loans were 100 LTV with no equity, and we know there were no guardrails around underwriting, there was no age concept of ATR. But there is today, and the attention to detail from investors buying these loans is much more stringent. There’s a much bigger lens and microscope on what’s going on and looking at due diligence results and having the concept of TPR firms.”

Read more: Putting the subprime ghost to rest

John Jeanmonod, regional vice president of sales at Angel Oak Mortgage Solutions, echoed Lind’s sentiments, adding that it all comes down to education: “It’s really about educating the broker world in the loans that are originated today versus what were originated in the mid-2000s. These borrowers are great borrowers. Our average LTV is in the low 70s, our average credit score is in the mid-700s, our average DTI is probably in the mid-30s. I would, and we do, lend our own money to these borrowers. As we continue to educate the entire world about who we are lending this private money to, we’ll get there.”

Will Fisher, executive vice president of non-QM and jumbo lending at LoanStream Mortgage, offered an interesting way of explaining the difference between the two products to borrowers.