Residential Magazine
Bullseye

Unique Loan Scenarios Demand Specialized Expertise

Boost your business by mastering the details of non-qualified mortgages

By Joseph Lydon

For mortgage originators like you who want to expand your client base and improve your loan offerings, becoming a non-qualified mortgage (non-QM) expert is a great way to boost your business. Many mortgage originators will come across unique loan scenarios that demand more flexibility that non-QM loans can offer.

Non-QM loans are alternative mortgage programs designed for borrowers who do not fit the traditional lending criteria. These loans cannot be purchased by the federal government or the government-sponsored enterprises. These borrowers often face difficulties finding funding not due to a lack of qualification but due to their unconventional income reporting methods.

This group of borrowers includes individuals with fluctuating income streams that complicate meeting standard lending requirements. Here’s how to effectively incorporate non-QM loans into your mortgage business strategy.

Difficult deals

Choosing the right lending partner is critical when trying to make a name for yourself in the non-QM space. Look for lenders who offer an expanded loan toolkit designed for a broader range of borrowers. These options might include bank statement loans, which cater to self-employed borrowers, or asset qualifier programs, that allows borrowers to leverage their assets instead of income for loan qualification.

If you come across a lender who specializes in non-QM, you will also want to consider if they offer additional educational resources such as monthly webinars, free white papers and other training materials to deepen brokers’ understanding of the non-QM space. By leveraging these resources, you can better serve your clients.

Besides partnering with a strong lender, you want to make sure you’re also taking on more unique scenarios and working with different borrowers. Just because you’re dealing with a difficult deal that gets turned down by the traditional lender, doesn’t mean your client can’t get strong funding.

By adopting non-QM programs into your product set, you’ll be able to reach a different type of client base, including freelancers, self-employed borrowers and many small-business owners, all of whom need flexible lending options. Deliver that “yes” they’ve been waiting for with more flexible loan programs.

Effective marketing

Now that you’re incorporating non-QM loans into your portfolio, it’s time to move on to the next step, which is effectively marketing yourself as a go-to broker for flexible financing. Just like a strong lender provides educational tools and resources, you can take that knowledge and share your insights.

Create targeted email campaigns, host informative webinars and publish regular blog posts that highlight the benefits and nuances of non-QM loans. Sharing insights like this establishes credibility and builds trust among potential clients.

Build a social media presence. In this day and age, a strong social media presence is indispensable. Platforms like Facebook, LinkedIn and Instagram, to name a few, can help you reach and engage with a broader audience.

Show off real-life success stories on your social media to demonstrate the practical impact of non-QM loan programs. Potential clients are more likely to trust brokers who provide visible, credible evidence of past successes.

Specific fits

To truly thrive in the non-QM space, it’s essential to familiarize yourself with various programs designed to meet the needs of non-traditional borrowers. Here are a few more you must know (besides the ones previously touched upon):

Bridge loans. These loans allow borrowers to leverage the equity in their existing home, giving them cash to use as a downpayment on a new property. It’s an ideal solution for clients looking to transition smoothly between homes without financial strain.

Fix-and-flip loans. Designed for real estate investors who purchase and renovate properties, this program provides the flexibility needed to capitalize on investment opportunities. By offering this financing option, you can tap into the lucrative fix-and-flip market segment.

Jumbo loans. These loans are ideal for borrowers who need financing that exceeds the conventional loan limits. They are particularly useful for high-income earners looking to purchase luxury homes or investment properties.

Profit and loss statement loans. Also known as P&L loans, these are aimed at self-employed borrowers or business owners who may not have traditional income documentation. Instead, they use profit and loss statements to qualify for a mortgage.

Foreign national loans. These loans cater to non-U.S. citizens who wish to invest in American real estate. They provide financing options for non- residents who may not have access to traditional mortgage products.

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Embracing non-QM loans presents several benefits for mortgage originators like you by reaching a wider range of borrowers who don’t qualify for traditional mortgages, which can really expand your client base. Offering flexible financing solutions helps build stronger, lasting relationships with clients.

For those ready to take their business to the next level, the time to act is now. Welcome the opportunities presented by non-QM loans and become the trusted expert your clients need.

Author

  • Joseph Lydon

    Joseph Lydon is co-founder and managing director at LendSure Mortgage Corp. He has spent more than three decades in the mortgage industry, including serving as president and chief operating officer at Accredited Home Lenders from 1997 to 2008. He also has worked at Ford Consumer Finance and Security Pacific Financial Services. Lydon earned a bachelor’s degree in management from Pepperdine University and a master’s degree from the University of San Diego.

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