On non-QM lending, a purchase spike, and your title agency as a marketing service...

In a Housing Wire article which ran at the end of 2017, S&P Global Ratings predicted that non-QM mortgage loans would double and perhaps even triple in 2018. You can see the entire article here:  https://www.housingwire.com/articles/42000-sp-we-expect-non-qm-market-to-double-or-even-triple-in-si... Early indications at the end of Q1 show that this is, indeed, coming to fruition. And while we can certainly debate the differences and similarities between a Non-QM loan and the oft vilified "subprime" loans of the early to mid-2000s, it seems safe to say that the mortgage industry is starting to make more credit available to borrowers with less traditional credit histories. 

 

Whatever one may think of the non-QM loan, we can likely all agree that it will be imperative for lenders to issue such loans with transparency, clarity, and consistency. Not just in the origination or underwriting processes, but in the settlement processes as well. Some of the issues that have been at the forefront of industry's consciousness the past few years take on greater urgency as purchase volume rises with the non-QM spike:  data security; fraud prevention; compliance. That's NOT to say the non-QM borrower is more prone to these issues.  Rather, purchase mortgage volume is about to go up, inflated by loans that may be perceived (or misperceived) as the evolution of subprime loans. Thus, it will be critical for our industry to be vigilant against even the appearance of impropriety. That will come with efficiency and transparency at every point of the transaction--especially where the consumer is directly involved.

 

In many ways, a title or settlement agency serves a marketing function or even brand-building function for a lender. How the borrower or Realtor is treated; how quickly calls are returned; how accurate the information provided is and how professional the closing is (not to mention how secure the entire process is) don't just reflect on the service provider.  They reflect on the lender. So as purchase volume begins to ramp up, it's past time for lenders to be fully certain that their settlement service providers are meeting the same high standards regarding consumer protection that they hold for themselves as well.

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