Agency loan originations are down significantly this year due to higher interest rates. Fannie Mae recently lowered its projected single-family mortgage origination volume for 2022 from $3 trillion to $2.8 trillion. With lower agency volume to pull from, many brokers are turning to non-QM to supplement their income.
“The dedication and the attention to detail from brokers today is great, because they’re focusing to get these loans through,” said Keith Lind, CEO at Acra Lending.
Lind said that Acra is seeing brokers come through from two different directions. First are traditional agency brokers who are spending more time on non-QM now that the agency pipeline they previously focused on is all but nonexistent. The second group is brokers on the private lending side.
Reaching more and new borrowers
Many brokers and loan officers are familiar with a business model in which leads come in and they pursue them. This model may have worked well for the last two years, but it’s time for a different approach, according to Lind.
“I think if brokers want to garner new business today, they’ve got to start thinking outside the box a little bit,” he said.
Lind recommended several ways for brokers to reach more and new borrowers with non-QM products, including targeting the right people using platforms like LinkedIn and reaching out to new contacts via conferences.
One key is to reach out to people who are in touch with non-QM borrowers, such as real estate agents and CPAs that do tax returns for self-employed people.
“A lot of the non-QM business, it’s just education – a lot of people don’t even know what we offer,” Lind said. “Part of it’s pounding the pavement and getting out there and meeting a lot of people. And then part of it is targeted advertising on the loans or products that they can offer.”
For example, Lind noted the existence of conferences for siloed businesses that use 1099 tax forms, such as Uber drivers. He recommended brokers attend those conferences with informational fliers. Brokers should try to set up group meetings to educate potential borrowers on the possibilities of buying a house with a non-QM loan, as many 1099 borrowers may not know their options.
“If you’re able to target them and educate them in an efficient manner, that’s a great way to get your business,” Lind said.
Need-to-know products
When it comes to the products that brokers should familiarize themselves with, Lind said the two biggest were loans for self-employed borrowers, such as Acra’s Bank Statement products, and investor loans, such as Acra’s DSCR product. The latter allows investors to qualify for a mortgage based on their cash flow.
Additionally, if brokers have some connection to foreign nationals looking to invest in property in the United States, Acra has a product for them, too.
“It’s the effort that people make to find these groups of people and find a nice, clear narrative that sells them on the products that you offer,” he said. “We see the people that do that, they’re incredibly successful.”
Choosing the right non-QM partner
Another crucial aspect of success in non-QM lending is choosing the right lending partner. At Acra Lending, they make a concerted effort to educate brokers about their products and provide white labelled marketing materials.
In fact, Lind said, everyone within the company has a good grasp as to what works and what doesn’t work with non-QM loans, setting Acra apart from other lenders doing non-QM.
“We have such a deep bench that can look at a scenario and get very comfortable and know that we’re doing it right, when a lot of these other shops, they just don’t have that expertise and it’s difficult,” he said. “It really just comes down to experience and seeing all of these difficult, convoluted loan situations where we’re able to leverage our knowledge and also teach and help processors and brokers on the other side who are our customers and partners.” To learn more about partnering with Acra Lending, visit https://acralending.com/.
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