Non qm loans 2021 mac#
And there may be further changes as Fannie Mae and Freddie Mac continue to move toward the conservatorship exit. President Joe Biden’s nominee for CFPB director, Rohit Chopra, is expected to reinvigorate the bureau with a new energy for enforcement, heightening the need for lenders to ensure compliance. In addition to regulatory changes already in motion, the new administration brings new leadership for the CFPB. Lenders will still need to carefully verify borrower documentation to ensure ability to repay. Under the new rule, mortgages currently labeled as non-QM per the DTI ratio cap could be eligible for agency backing. Loans purchased by the GSEs with applications dated on or after July 1 will be required to meet the standards of the new QM Rule. 1, 2022.įannie Mae and Freddie Mac recently confirmed that they will be moving to the new non-QM pricing definition beginning July 1, 2021. Its mandatory compliance date is now Oct. The new rule establishes a pricing threshold that effectively replaces the DTI limit of 43% with a price-based approach.
The issuance of the Revised Qualified Mortgage Rule by the Consumer Financial Protection Bureau could expand funding options for non-QM borrowers. However, amid this growth are a number of changes affecting the non-QM market. Plus, as rates rise and the refinance boom slows, non-QM lending is a way for many originators to expand their product offerings to replace volume. And investors are turning to non-QM products like a Debt Service Coverage Ratio program as GSE guidelines around investment properties shut them out of agency loans. This makes it more likely that their best loan fit falls under non-QM rather than agency products.Īdditionally, the rise in home prices over the last year has led to more need for jumbo non-QM loans as borrowers look to purchase or refinance higher value properties. For example, the number of self-employed borrowers has grown as more people go into work for themselves or join the gig economy. There are also increased opportunities for non-QM originations.
Investors are returning to the space with more confidence, and new investors like private equities and insurance companies are showing interest. In fact, a recent report from S&P Global estimates that “non-QM issuance volumes will return to 2019 levels this year, reaching an estimated $25 billion” as agency refinance activity slows down and the purchase market remains strong.Įven with 2020’s liquidity problems and subsequent pause, the non-QM sector closed out the year strong, with $18.9 billion in total securitizations – only a 33% decrease from its 2019 high.
Despite 2020’s pause in originations and securitizations, the 2021 outlook for non-QM lending is promising.
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