Deephaven’s Surge: Harnessing Non-QM Loans in a Changing Economy
In September, Deephaven Mortgage achieved remarkable success, driven by an upward trend in non-QM (Qualified Mortgage) and non-agency loans—financial products specifically designed for borrowers outside the rigid classifications of traditional lending. Tom Davis, Deephaven's head of sales, discussed these developments at the Mortgage Bankers Association’s annual conference, emphasizing the increased accessibility of homeownership in our evolving job landscape.
Understanding Non-QM Loans
As the gig economy expands, the need for flexible mortgage options grows. Non-QM loans address the unique financial situations faced by millions of Americans, particularly those engaged in freelance work or with unconventional income sources. In fact, Davis noted that non-QM loan production forecast exceeded expectations this year, potentially reaching over $100 billion—an increase from initial estimates of $60 to $70 billion. This shift signifies a transformational moment in the lending industry and an opportunity for growth.
How Deephaven Is Leading the Charge
Deephaven has pioneered the non-QM lending space since its inception in 2012. The company’s approach emphasizes a "pro-borrower" philosophy, which contrasts with the traditional view of non-QM as a fallback option. Davis articulates a clear understanding of the financial landscape, noting the diverse forms of income due to the rise of multi-job households, and highlights the need to analyze financial health beyond conventional documentation.
Loan Offerings that Resonate
Among Deephaven's expanding suite of products are second lien loans and rental property investments. Davis points out that home equity is at an all-time high, providing an unprecedented opportunity for second lien loans. Additionally, solutions for investors, who make up roughly a third of the housing market, are crucial in this age. Loan officers embracing a diverse offering of mortgage solutions can effectively tap into the burgeoning investor space.
Capitalizing on Change: Opportunities for Loan Officers
The mortgage industry faces pressures unlike any previous years, necessitating an agile response to market demands. For loan officers who want to thrive, understanding non-QM products is essential. With 19 million investment properties and approximately 18 million self-employed individuals in the U.S., the market potential is significant. Incorporating these specialized loan products not only helps in attracting a broader clientele but also places loan officers at a competitive advantage.
The Bigger Picture: Why This Matters
The trends in non-QM lending reflect broader economic changes and demographics in the United States. As borrowers increasingly prefer alternative income verification methods, lenders positioned to adapt will find success. This aligns with the changing nature of work, where self-employment has risen sharply post-pandemic, demonstrating that more innovative lending practices are essential for attaining homeownership.
Final Thoughts on Market Trends
The upward trajectory for non-QM loans indicates a shift in the mortgage landscape—one that embraces the uniqueness of today’s borrowers. Deephaven’s record-breaking months are a testament to their forward-thinking approach and a call to action for industry professionals to embrace new solutions tailored to serve the evolving needs of homebuyers today.
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