Whistleblower lifts lid on “toxic” non-QM lender

Tom Hutchens, executive vice president of production for Angel Oak Mortgage Solutions, said he did not believe X’s story.

“I think you’re talking to a disgruntled person who’s trying to smear an industry. I’m not going to say that there aren’t some exceptions, but every single investor, securitizer and lender has pre-approved guidelines,” he said.

“If they decided to go off guidelines and make an exception, it has to be fully documented. But I can tell you with 100% certainty, there’s no-one in our industry that has a guideline that says we’ll do loans for borrowers with a 500 credit score, or that we won’t verify assets. That’s not a sustainable model because of all the checks and balances that are in place and have been in place since 2013 in this space. If there was a lender doing that, it’s not going to be sustainable.

“If they are originating loans and not verifying assets and doing them down to 500 credit scores, they have to document why on each loan, and investors get to see all this documentation, unless they’re committing fraud.”

Jon Maddux, chief executive officer and co-founder of non-QM specialist Fundloans, said: “I obviously believe in sound lending practices and this doesn’t seem like a good way of determining a good lending credit risk. That type of underwriting is bound to come back with some undesirable results. It’s necessary to determine the ability to repay and most non-QM companies, including us, verify the borrower’s ability to repay.”