Update: Wednesday March 25

The latest victim of the coronavirus could be non-QM loans. After seeing a increased activity in the past two years, a number of wholesale lenders have suspended non-QM funding this week or have tightened their standards on acceptable FICO scores.

Sprout was one of the very few companies still funding non-QM loans after Monday, but on Wednesday the company sent the following message: “Please note that effective today, we will temporarily suspend funding for all loans until April 1. During this period, we will also not advance outstanding loans to the “Clearance at Closing” stage and we will not accept any new rate lock-in requests.

“However, we will continue to accept new loan submissions and provide underwriting approvals, as well as broker packages.”

Meanwhile, ACC Mortgage announced that it is still funding non-QM loans. “While some lenders are withdrawing from non-quality management activities: ACC Mortgage remains open for business. We are funding “non-QM” loans and we have no intention of stopping! We are always 100% committed to providing you with the best solutions for your non-QM borrowers.

Update: Monday, March 23, 2:45 p.m.

Citadel maintenance company, who had been one of the few non-QM refractories, announced this afternoon that they would temporarily suspend loan arrangements for the next 30 days. However, the company was quick to point out that the decision was not made due to a lack of cash. Extract from the Citadel declaration:

“It is important to note that CSC does not end or close its activities. We have a strong balance sheet and do not experience any credit or liquidity issues. Instead, we are making this business decision out of prudence, in order to comply with the Executive Order of California Newsom, and to recognize in-person interactions during loan close and in the creation process. Current conditions call for reconsidering these interactions. We would like to clarify that to limit the impact on consumers, we plan to fund purchase cash loans intended for primary occupancy transactions currently in our finance department with closing documents issued. We will also extend and honor conditional loan approvals for applicants who continue to qualify under our guidelines when resuming operations. “

The company also included a deadline, but with a caveat. “SCC
plans to fully resume normal activities after thirty (30) days or if conditions permit. We will return, and with your continued support, stronger and better than ever. “

Update: Monday, March 23, 11:55 a.m.

Home Arc, who was still continuing her non-QM schedule on Friday, announced the suspension of her non-QM origin on Monday morning. In an email, the company said: “The COVID-19 pandemic has created unprecedented conditions in current credit markets and, in turn, has caused Arc Home to immediately suspend all lending activities related to origination for the Arc Access suite of programs (non-QM products) alone. Outstanding non-QM loans will not progress any further, regardless of their status.

“We believe in the value of the non-QM market to the overall economy and in the strength of the US real estate market. In addition, we continue to be a leader in pricing, technology and service for agency and government products. We continue our special offer on purchase prices and focus on the best turnaround times in the industry. “

Monday, March 23, 10:12 a.m.

Friday we noted that Angel Oak Mortgage Solutions was one of the few lenders still offering non-QM standards, but tightening. This morning, however, the company announced that it was suspending all lending activity. “Due to constant changes and the inability to properly assess credit risk, we put all lending activities on hold for two weeks. This includes financing and any new lending activity.

Caliber Home Loans announced on Friday a “temporary suspension” from accepting new applications for its non-QM product offering. “It was a difficult decision and we will continue our efforts in product innovation as the market recovers,” said David Schroeder, executive vice president of third-party creations at Caliber, in an email. “Our commitment to all other products is unwavering and our team is thrilled with what the future holds by supporting you in all markets. “

Published story Friday March 20.

Friday the lender was the last company to announce that it was no longer totally out of QM, and posted this statement on Friday afternoon on its website:

“With US interest rates at historic lows, unprecedented government stimulus and the Fed’s return to the agency and government loan markets, we recognize that there is not enough capacity in agency markets to serve a struggling America. With our mission statement stating that theLender is “to provide customer centric solutions to help customers achieve their dreams”, we have decided to put the full strength of our platform behind the American people. To support the US economy and be a beacon of hope during tough times, the lender will prioritize QM loans for as long as America needs them.

“From today, with immediate effect, we are suspending all non-QM loans. This includes funding any other NonQm loan, foreclosure or registration. We understand this is a burden on our broker clients and their clients, but hope they understand this decision during this incredibly difficult time in America. “

Nations Direct Mortgages also closed its non-QM program. In an interview with HousingWire on Friday, Martin Warren, general manager of loans and specialty services at Nations Direct, described it as a “temporary exit” from non-QM business. “We have a number of Wall Street and other big partners, so we’ll just wait and see what the appetite is. If our Wall Street partners want to re-enter, we will. In the meantime, we have a huge pipeline of FHA / VA agencies and activities to keep us busy. ”

Orion loan also stop his non-QM. Justin Simpers, senior account executive at Orion, posted a video on the topic on Friday. “The non-QM loans are gone,” Simpers said in the video. “It’s sad, but it’s just the hard truth. Liquidity – no one has it. Just like the crash of ’07 -’08, the non-QMs are gone.

JMAC announced that it is suspending funding for all non-QM products, with immediate effect. In an email, the company said, “This news comes with great difficulty as our customers have been using these innovative NonQM products for many years. We will continue to monitor market conditions so that we can provide our partners with the products you need. “

AmWest sent a statement to brokers stating that they have revised the price of their portfolio products at market clearing rates.

Angel Oak Mortgage Solutions is one of the lenders still offering non-QM but more stringent standards. The company sent this message on Friday:

“Angel Oak is financially stable with a strong balance sheet. In order to allocate these resources as efficiently as possible, we have made changes to our rates and guidelines going forward. If you have any active loans outstanding with us, please coordinate with your Account Executive to process them. For all upcoming loans, your account manager is ready to help.

“I want to stress that this is not a credit problem – these are strong, performing loans. Unfortunately, the pandemic has caused a state of flux in the financial markets which is having an impact on the entire real estate sector. Angel Oak was created to provide access to capital to people excluded from the agency market. This mission will continue.

Friday also, Loans at the edge of the park communicated to brokers that they will not approve any loans with a qualifying credit score below 660 for all loan products. Previously, the company was at 580 for government loans and 620 for classics. Parkside also indicated that it is reducing its jumbo product offering and not offering non-QMs.

These companies joined others who closed non-QMs earlier in the week, including Mega capital financing, who sent a message to brokers that said: “Due to the retractions in financial markets in response to the coronavirus pandemic and the uncertainty in the non-QM space, MCDI will suspend funding for all of our non- QM and non-QM related products. This includes registering, locking or pre-locking loans. Any loan with signed docs, we will finance it. Any loan without signed documents will be suspended for the foreseeable future or until market stability returns. “

HomeXPress Mortgage Corp. sent a letter explaining that they would “pause all lending activities in order to make a proper assessment of market conditions and allow us to create programs suitable for all constituents of the mortgage lending process”.

During this time, Maintenance of the citadel, what was purchased through HPS investment partners in February, continues its unabated non-QM agenda. Home Arc is also still in the non-QM business. But the evaporation of many non-QM funding sources means borrowers outside of the traditional credit box have fewer options than ever before.

This is a developing story and is updated with information and quotes as they arrive.