Sean Marr is director of correspondent lending for Angel Oak
Mortgage Solutions. Prior to Angel Oak, Marr served in the
mortgage industry for 25 years in various sales and sales
leadership roles with organizations such as HomeSide Lending and Citibank. Reach him at (904) 521-4511 or
Grow Your Business
Where the Borrowers Are
Once an afterthought, non-agency lending is set for explosive growth
By Sean Marr
Today’s mortgage market is becoming increasingly difficult, with lower margins, aggressive competition, a decreasing orig- ination forecast and climbing interest rates.
On top of that, certain key housing markets continue
to experience serious inventory shortages.
One solution for mortgage professionals is to embrace non-agency products through correspondent lending. Non-agency is a term that refers to
loans that are not purchased and securitized by the
government-sponsored enterprises, which include
Fannie Mae and Freddie Mac.
Many mortgage bankers and other lenders were unaware or uninterested in non-agency offerings not
too long ago. That has changed dramatically this past
year, and it is increasingly clear that originators
strongly desire alternative mortgage options. Partnering with an investor as part of a correspondent-lending relationship can help to expand product
offerings and is a prudent business consideration.
Correspondent lenders, which originate loans in
their own name and then sell those loans to a sponsor
lender, are increasing their own menu and appetite for
higher-margin loan volume, which is resulting in more
product options and providing a competitive edge in
an ever-changing marketplace. The space is not just
emerging anymore, but has arrived, well-positioned
and generating significant volume.
Correspondent lenders who have been on board for a
while are experiencing a streamlined process and can
meet customers where they want to be met through
customized loan options and traditional underwriting.
More and more correspondents are embracing non-agency lending to help replenish their business, retain
and recruit loan officers and ensure profitability.
The education and refinement of the process has
been occurring for years. Now, the mainstream has
embraced non-agency offerings via correspondent
lending and the growth curve is becoming steep.
Those hesitating to add these products and who have
not worked with an experienced industry-leading
investor, are now rushing to become aligned.
The number of mergers and acquisitions are increasing in the marketplace. It is now more difficult to maintain business, and downsizing has occurred across the
country. For those still standing at the train station,
consider that your competitors likely have correspondent lending options or soon will.
There are benefits to your organization that will
occur with correspondent lenders in the non-agency
arena to offer ever-evolving new programs, jumbo
loans, self-employed programs as well as other
alternative-lending options. Mortgage companies
should have delegated and nondelegated underwriting
options available through a partner with years of
experience understanding today’s non-agency space.
One of the Mortgage Bankers Association’s top lender
takeaways from their annual conference in Denver
this past October was that non-qualified mortgage
(non-QM) loan volume is expected to double in 2018,
compared to 2017 levels. The MBA said industry partici-
pants are bullish on the non-QM sector across all chan-
nels, adding that the projected growth will be fueled
by expanding correspondent-lending divisions.
The market is accepting non-agency lending more
now than ever before. This has stemmed from a huge
change and response to demand. Stricter guidelines,
proven results and data indicating quality loan performance have caused the change and spurred the business to keep evolving. As such, non-agency businesses
are expanding to handle the growth from an operational standpoint.
Stricter lending guidelines have put an end to previous concerns about subprime loans. Non-agency is
performing so well now because borrowers are required to have sizable downpayments. Borrowers also
are now required to present documentation validating
their ability to repay. These are solid, performing loans.
Those with past credit problems see hope for the
future to fulfill the dream of homeownership. They are
in much better standing, bringing their own equity to
the transaction and eager for an option through their
mortgage banker who understands their situation.
These borrowers, along with self-employed individuals who often seek jumbo-loan amounts, are some
of the reasons correspondent lending divisions are
The inclusion of jumbo offerings is another reason
why correspondent lending is doing so well. Most
correspondent lenders have been clamoring for a
well-executed prime product that can compete
against the national banks and wealth managers.
The largest operators of non-agency lending have
been able to launch their own prime jumbo products that few can compete with. Now the best jumbo
For more articles on
View these articles and more at
“Are We Ready for Non-QM Lending?”
“Grab a Slice of Purchase Pie,”
“The New Prime Jumbo,”
Matthew J. Tomiak,
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