NMP National Mortgage Professional April 2022

APRIL 2022

Vol. 14, Issue 4 $20.00

EVERYONE’S

ALL IN ON

NON-QM So Many Are Piling On. Just How Strong Is This Product?

SWIVEL QUICKLY

WHEN FACING MARKET CHANGES

KEEP IT CLEAR

Lest your clients wonder why you’re not candid SHOULD GSES HELP INVESTORS BUY HOMES IN BULK? A PUBL ICAT ION OF A ME RICA N BUS INE SS MEDI A

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APRIL 2022

Vol. 14, Issue 4 $20.00

EVERYONE’S

ALL IN ON

NON-QM So Many Are Piling On. Just How Strong Is This Product?

SWIVEL QUICKLY

WHEN FACING MARKET CHANGES

KEEP IT CLEAR

Lest your clients wonder why you’re not candid SHOULD GSES HELP INVESTORS BUY HOMES IN BULK? A PUBL ICAT ION OF A ME RICA N BUS INE SS MEDI A

APRIL 2022

Volume 14 Issue 4

CONTENTS

nationalmortgageprofessional.com

4 Expanding Our Boundaries Our growth in multimedia promises to serve our readers in new ways.

6 Dealing With Turbulent Times Prepare your staff for the future while you help them cope with the present.

8 Drink A Candidate Brew A cup full of transparency is the best elixir for difficult situations with clients.

COVER STORY PAGE 34

IS NON-QM THE SAVIOR? Insiders expect huge gains in market share but analysts are being much more cautious.

Non-QM

10 Should Wall Street Own Elm Street?

The battle over Fannie Mae and Freddie Mac helping investors buy single-family homes.

15 People On The Move See who the movers and shakers are in the mortgage industry.

16 Build-A-Broker: See The Signs Of Sudden Change Spot these trends to stay ahead of abrupt market swings.

20 My First Million: The Power Of Print People’s lives change in two ways — through the people they meet and the books they read.

22 Tips For Self-Marketing Providing value is the best way to “sell” yourself and position yourself as a knowledgeable resource.

26 Non-QM Lender Resource Guide 30 Wholesale Lender Resource Guide 32 DataBank 38 Non-QM Lender Directory 39 Resource Directories 42 Facebook Thoughts: My Exercise Is On The Rocks

nationalmortgageprofessional.com

NATIONAL MORTGAGE PROFESSIONAL MAGAZINE | APRIL 2022 |

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STAFF

APRIL 2022

Vincent M. Valvo CEO, PUBLISHER, EDITOR-IN-CHIEF Beverly Bolnick ASSOCIATE PUBLISHER

Volume 14, Issue 4

LETTER FROM THE PUBLISHER

Building Back Better

A

Christine Stuart EDITORIAL DIRECTOR David Krechevsky EDITOR Keith Griffin SENIOR EDITOR Mike Savino HEAD OF MULTIMEDIA

s mortgage markets move, lenders and originators need the best information possible, delivered in the most convenient method.

That’s why we’ve doubled down at American Business Media to bring the community the most thoughtful and innovative news and insight possible.

It’s no surprise that the COVID-19 pandemic hurt many media companies, at least initially. Advertisers pulled back to see what the market was going to do. Live events were tamped down. And many companies found their ability, or willingness, to grow severely hampered.

But here, we’ve always seen adversity as a challenge of inspiration. During the heyday of the pandemic, we launched new initiatives, acquired other publishers, bought out event software providers, and found ways to deliver more to you, and to do it more smartly.

Now we’re going even further. Since the start of the year, we’ve bought our own office building to accommodate our growth plans. We’ve doubled our staff overall. And in our editorial area, we’ve tripled our headcount.

Our additions include a Pulitzer Prize winner, an accomplished director, an entrepreneurial editorial leader, a graphics specialist and an award-winning print and broadcast journalist. The purpose is to make sure that when mortgage news breaks, you hear it from us first. And when you need insight on how to be at the top of your game, there’s no better analytical team than here.

Katie Jensen, Steven Goode, Douglas Page, Sarah Wolak STAFF WRITERS

MULTI MEDIA

Michael Castro MARKETING MANAGER

We’re also going beyond the boundaries of print and digital delivery. We’ve built out our own state-of-the-art multimedia studio, and have hired the right leadership and talent. Over the next few weeks, you’ll see announcements of daily newscasts, of in-depth podcasts, and of specialty programming that takes you inside improving minority housing and helps aspiring brokers find their footing.

We’re also bring this all together under our www.nationalmortgageprofessional. com website, so you can access all the information you need at one source, and all for free.

Our tagline has been that “we write the story of your success.” Perhaps it should be that “we tell the story of your success.” Because in print, online, in video or audio, or at live conferences, only one media company brings it all to you. American Business Media stands with you.

V INCEN T M. VALVO CEO, Publisher, Editor-in-Chief

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| NATIONAL MORTGAGE PROFESSIONAL MAGAZINE | APRIL 2022

Rob Chrisman, Dave Hershman, Erica LaCentra, Nick Roberson, Lew Sichelman, Mary Kay Scully, CONTRIBUTING WRITERS Alison Valvo DIRECTOR OF STRATEGIC GROWTH Meghan Hogan DESIGN MANAGER Christopher Wallace, Stacy Murray GRAPHIC DESIGN MANAGERS Navindra Persaud DIRECTOR OF EVENTS William Valvo UX DESIGN DIRECTOR Andrew Berman HEAD OF CUSTOMER OUTREACH AND ENGAGEMENT Tigi Kuttamperoor, Matthew Mullins MULTIMEDIA SPECIALISTS Melissa Pianin MARKETING & EVENTS ASSOCIATE Kristie Woods-Lindig ONLINE ENGAGEMENT SPECIALIST

Joel Berman FOUNDING PUBLISHER Submit your news to editorial@ambizmedia.com If you would like additional copies of National Mortgage Professional Call (860) 719-1991 or email info@ambizmedia.com

www.ambizmedia.com © 2022 American Business Media LLC. All rights reserved. National Mortgage Professional magazine is a trademark of American Business Media LLC. No part of this publication may be reproduced in any form or by any means, electronic or mechanical, including photocopying, recording, or by any information storage and retrieval system, without written permission from the publisher. Advertising, editorial and production inquiries should be directed to: American Business Media LLC 88 Hopmeadow St. Simsbury, CT 06089 Phone: (860) 719-1991 info@ambizmedia.com

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DAVE HERSHMAN

RECRUITING, TRAINING, AND MENTORING CORNER

Nothing Stays Still, And Neither Should You

Leaders prep their team and colleagues to deal with turbulent times

BY DAVE HERSHMAN, CONTRIBUTING WRITER, NATIONAL MORTGAGE PROFESSIONAL

L

ong-time readers know that, in my 40-year career in this industry, I have come to the conclusion that the only constant in this industry is change. And while some change, such as technology innovations, is expected, much of the change cannot be forecast, and therefore is not something you can prepare for.

How many predicted that a virus would shut down segments of our economy for a two-year period? And when things shut down, how many predicted that real estate would become even hotter than ever during the time we were dealing with the pandemic?

Perhaps you read these predictions, but I suspect that the vast majority of us did not see these things coming.

And inflation? Two years ago, we were dealing with disastrous predictions of deflation as the recession hit. Now there are shortages of everything — houses, cars, workers, oil, and more. Not enough workers to fill skilled positions and not enough chips to make our new technology-laden cars viable.

With such devastating worldwide news to deal with, one would have thought this would have rallied our country and the world to come

together. Unfortunately, our country seems to be as divided as ever, and the world is fighting just as much as it always has. The war in Ukraine is just the latest example in the headlines — obviously a very huge example.

And while we must lead through change, we must also understand that not everyone can cope with change — especially huge changes such as the pandemic, recessions, and war. We have had some loan officers who refused to come out at all during the pandemic, while others refused to believe that the pandemic was real or was a threat.

When the news is filled with graphic pictures of a country invading another country, emotions will run very high.

Some may become fixated on watching the progression of this tragedy. Others will keep their heads down and will continue plugging away.

However, when there are several factors influencing our business and the world around us, we are more likely to see major variations in effectiveness and reactions within our staffs. Let’s just recount these issues: • The pandemic • Inflation • Shortages of inventory • Rising interest rates • Lower volumes • More price competition and lower margins • A regional conflict • Economic sanctions.

Should we continue? Any three of

these would be a lot of change to deal with, but today we are smothered in changing circumstances. This is a challenge to everyone in this industry and certainly represents a huge challenge to leaders. We not only have to deal with these factors, we have to help our staffs deal with them individually.

This is a time in which we need to open our hearts and our minds in such a way that we can help others cope. For example, this is not the time for closed doors and negative vibes because of lower production and profit levels. We must lead through positive motivation.

Every factor on this list hopefully has an expiration date. For example, rising interest rates could actually lead to another refinance boom in the future. If you help your sales force set up their CRMs to continuously add value to their previous customers, that boom will be more lucrative for them.

In other words, prepare them for the future while you help them cope with the present. Quite a task — but that is why they call you a leader. n

Senior Vice President of Sales for Weichert Financial Services, Dave Hershman has seven books published, and is the founder of the OriginationPro Marketing System and the OriginationPro Mortgage School — the online choice for mortgage learning and marketing content. His site is www.

OriginationPro.com and he can be reached at dave@hershmangroup.com.

This is a time in which we need to open our hearts and our minds in such a way that we can help others cope.

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| NATIONAL MORTGAGE PROFESSIONAL MAGAZINE | APRIL 2022

What about

YOURS? APM is actively seeking branches and recruiting loan officers across the U.S.

Visit JoinAPM.com or contact DUSTIN BLOCK at 303.378.3166. ©202 1 American Pacific Mortgage Corporation | NMLS #1850. All information contained herein is intended for mortgage professionals only and not for public distribution.

ERICA LACENTRA

RECRUITING, TRAINING, AND MENTORING CORNER

The Importance Of Transparency With Your Clients When trouble is brewing, be candid

BY ERICA LACENTRA | CONTRIBUTING WRITER, NATIONAL MORTGAGE PROFESSIONAL

A

s a company in the mortgage industry, and especially if you’re on the more traditional side, you’re probably already used to providing a high level of transparency in your marketing due to licensing requirements and regulations. It’s obviously proper business practice, and frankly necessary to avoid being misleading in your marketing efforts or employing bait-and-switch advertising tactics. However, once you’ve covered yourself from both a legal and ethical perspective, there lies a gray area where companies must decide just how open they want to be in their communication with customers and how much they want to pull back the curtain when delving into certain issues.

Many companies in the mortgage space first ran into this dilemma when COVID-19 hit two years ago and they had to put a pause on originating loans. Some companies chose to fudge the truth and string their customers along,

hoping to get operations back up and running before any damage was done.

Other companies chose to stay silent, leaving their customers in the dark and hoping to have better news before long. A final group chose to be transparent with their customers.

While the thought of telling clients that you cannot originate their business was no doubt terrifying, these companies decided honesty was the best policy regardless of the outcome. As we saw at the end of this scenario, the companies that chose to be upfront with their customers tended to come out of this period relatively unscathed, while their silent or dishonest counterparts suffered serious reputational damage.

As we go into a rising interest rate environment, and companies are forced to increase their own rates, and in turn, make major changes to their businesses, we are already witnessing a similar situation start to unfold where, once again, many companies are not choosing to be as upfront with their clients as they should be. It’s time for companies to realize that honesty really is the best policy, and here’s why.

SET EXPECTATIONS There is nothing worse than working with a company that overpromises and underdelivers. When the final product pales in comparison to the expectation that was set, it shatters

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any sense of trust that customer ever had in the company. The same is true when companies withhold crucial information from their customers that has a direct impact on them.

For instance, if your company has product program changes in progress that may directly impact a customer’s file, set those expectations as early on in the process as possible. Even if the rate on a loan could potentially be higher than your customer is hoping for because of rising rates by the time you rate lock, it’s better to make that abundantly clear beforehand rather than come back with higher pricing than what you promised initially.

That way your customer either knows what they are getting or, in a bestcase scenario, could end up with lower pricing than you quoted, so it’s a win/ win either way.

Setting proper expectations is so crucial because if you choose to overpromise, and can’t make good on it, any confidence that customer had in your company is gone and most likely that customer isn’t coming back. Also, there is the reputational

| NATIONAL MORTGAGE PROFESSIONAL MAGAZINE | APRIL 2022

risk of that customer sharing their experience with others, because it is true that people who have a bad experience tend to be much more vocal than those that have a good experience.

Trying to stretch the truth to save a deal will cause much more damage in the long run.

PUT YOUR CARDS ON THE TABLE Setting expectations is one piece of the puzzle, but just how much should you share with your customers?

Obviously, any major product or process changes that would have a direct impact on clients need to be communicated.

Not just what those changes are, but also, if possible, why those changes are occurring and what that means for those customers. Especially if it’s not a positive change, knowing the reasoning why might not make the news any better, but it can certainly take the sting off and it instills trust with your customers as opposed to just taking an “it is what it is” approach.

Beyond that, when choosing what information your company shares with your customers, think about any other updates that, while they may not have a direct impact, would still be important, or at least interesting, for them to know about. Big hires, such as additions to the executive team, retirements, resignations, and promotions of employees into key roles in the company should be communicated, as this may have bearing on internal processes, new teams being formed, or ultimately affect customers’ current points of contact.

Expansions of a company, whether new divisions being created or physical expansions, like an office or branch opening in another state, is great information to also share. News like this can potentially attract new customers or opportunities. Finally, strategic partnerships with other companies in the industry are often great information to share with clients, and again, another way to increase credibility and potentially offer more

value to your customers. Having more open communication with your customers should be viewed as an opportunity to better connect, not a chore, because it also allows them to feel more invested in your company.

KEEP THE LINES OF COMMUNICATION OPEN At the end of the day, it is ultimately up to your company to choose how much you want to share with your customers.

There will always be certain situations, like confidential matters, you will need to keep close to the vest. However, there are things like changes to your products and processes or major company updates that are important to be upfront with your customers about. Instill confidence and trust in your customers by ensuring your company is communicating and being transparent. n

Erica LaCentra is Chief Marketing Officer for RCN Capital.

NATIONAL MORTGAGE PROFESSIONAL MAGAZINE | APRIL 2022 |

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LEW SICHELMAN

RECRUITING, TRAINING, AND MENTORING CORNER

Battle Brews Over Big Bucks Landlords

Heat building on Wall Street single-family home investors, and on Fannie Mae and Freddie Mac for investors in general

BY LEW SICHELMAN, CONTRIBUTING WRITER, NATIONAL MORTGAGE PROFESSIONAL

I

nstitutional investors in rental real estate have long been in the cross-hairs of consumer groups who say they are nothing more than money-making machines that have little regard for their occupants.

Now, some federal lawmakers are calling them on the carpet.

Muckraking Sen. Elizabeth Warren, D-Mass., has written to three major outfits, asking them to explain themselves for allegedly increasing rents, driving up housing costs, and raking in profits amid a housing crisis in which young first-time homebuyers are finding slim pickings in their search for a home they can call their own.

The Senate Banking, Housing, and Urban Affairs Committee held two days of hearings in February to hear firsthand about the situation. At the end of the day, committee chair Sen. Sherrod Brown, D-Ohio, said well-heeled Wall Street investors “are not running a business, they’re running a scam.”

What’s all the squawking about?

According to Redfin, investors snapped

up a record 18.4% share of the houses sold in last year’s fourth quarter alone.

All told, they spent $49.9 billion on 80,293 houses, for an average of $343,000 per. And together, 75% of the LLCs, trusts, and corporations identified by the real estate brokerage chain paid cash, crowding out regular buyers who needed financing.

All that in just a three-month period! In the third quarter, Redfin says investors spent more than $63 billion to purchase 90,000-plus houses.

That is an increase of more than 80% compared to the same period in 2020.

All of which coincides nicely — maybe too nicely — with the run-up in rents.

HOUSING TOLL In 2021, rents rose 10% or more in 90% of the nation’s major markets, Yardi Matrix reports.

In some spots, rents rose by more than 20%, the commercial real estate data

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firm said. Invitation Homes, one of the country’s largest investors in rental houses (as opposed to apartments), says that in its overall footprint, rents in new leases signed in the fourth quarter rose by 17.3%.

In places like Phoenix, Tampa and Las Vegas, rents were up over 20% in the period. For 2021 as a whole, new tenants paid 14.4% more. Current tenants paid more, too, just not as much more.

Based in Dallas, Invitation Homes, which claims to own upwards of 80,000 houses, is one of the three outfits called out by Sen. Warren. (The two others are Progress Residential and American Homes 4 Rent.) It is owned in large part by the Rockpoint Group, a private equity investment firm headquartered, ironically, in Boston.

The Massachusetts legislator said she wrote the letters because the companies’ “growing activity in the housing market has resulted in rent

| NATIONAL MORTGAGE PROFESSIONAL MAGAZINE | APRIL 2022

hikes and unaffordable homes for first-time buyers.” She asked them to detail information about their business practices to determine whether they have been taking advantage of the housing shortage to boost their earnings while raising housing costs, hiking up fees, and evicting Americans during the pandemic.

MARKET STRENGTH “Private equity firms and rich investors have been taking advantage of the housing shortage by purchasing large numbers of houses and raising rents for families, all to pad their bottom line,” she said in a statement.

“With record investor activity in the housing market, these firms need to answer for their business practices that shut Americans out of home ownership and strain their pocketbooks with rapidly rising rental costs. We can’t solve the housing affordability crisis, and lower housing costs for consumers, unless we crack down on predatory practices by Wall Street investors.”

During the hearings, Warren said their responses were — how shall we put this? — less than scintillating. Even though I haven’t seen their replies, I don’t think they were enough to assuage the senator, who is generally credited with creating the Consumer Finance Protection Bureau. She characterized them this way: “They all told me not to worry … They each gave me similar defenses — they play a relatively small role” in the rental sector and “by scooping up houses, they make the rental market more accessible.” She called these and other firms like them “vulture investors.”

Vultures or not, institutional investors have their defenders. One is the banking committee’s ranking minority member, Sen. Pat Toomey, R-Pa., who said in his opening statement that “there’s nothing wrong with putting money to work.”

Calling the hearings an effort “to take the heat off the Biden Administration’s failure to curtail inflation,” the longtime legislator said Democrats are “desperate to find someone else to blame” for the president’s “reckless mismanagement of the economy …

There’s nothing wrong with people

renting homes instead of, or before, becoming homeowners. And there’s also nothing wrong with investors — whether institutions or individuals — putting their own money to work to meet the needs of these renters.”

GSE HELP Toomey was the only Republican lawmaker to participate in the hearings.

But Tobias Peter of the conservative American Enterprise Institute and Joel Griffith of the equally conservative Institute for Economic Freedom and Opportunity at The Heritage Foundation also appeared. And here’s where the secondary mortgage market comes in.

All three agreed that Fannie Mae and Freddie Mac’s increased participation in the multifamily sector made it too easy and inexpensive for investors to put their money into rental housing. “This is a simple issue of supply and demand,” Toomey said.

“Institutional investors are the ones with the deepest pockets, the ones with the most capital available to invest in building new housing stock.” Their remarks were aimed at all of Fannie and Freddie’s multi-family purchases.

They do not now support SFRs. At one time, Freddie Mac was involved in a SFR pilot program, but that short-lived initiative ended in 2018. That effort focused on middle-tier and very small investors with properties affordable to tenants who earned 80 percent of the median for the location. The key takeaways from that pilot can be found in a 30-page white paper.

Peter, who is assistant director of research at AEI’s Housing Center, said big money landlords are using the taxpayer guarantees and other advantages offered through GSE funding “to greatly expand their

businesses while crowding out private investors … (The GSEs) tout that they are supporting affordable rental housing, but in reality they create government profit-seeking.”

“The housing market is changing and the real culprit is a massive house price boom fueled by federal housing and monetary policies, which is increasingly crowding lower-income Americans out of the housing market,” the AEI economist argued.

“Institutional landlords, particularly on the multifamily side, are taking advantage of more liberal credit terms provided

by Fannie Mae and Freddie Mac than the private sector, which is a violation of their charters.”

“They use their taxpayer guarantee and other advantages to greatly expand their business, while crowding out multifamily private investors,” he continued. “Since 2014 outstanding multifamily mortgage debt has doubled, with the GSEs accounting for most of the growth.”

Rich investors have been taking advantage of the housing shortage by purchasing large numbers of houses and raising rents for families.

RISING RETURNS Peter also warned the funding situation may become worse before it gets better. The Federal Housing Finance Agency, Fannie and Freddie’s government conservator for more than a dozen years now, recently made policy changes that increases GSE competition with the private sector, he said.

Moreover, the GSEs affordable housing goals may be increased, he added. Even the Federal Housing Administration is considering changes that will increase its competition with the GSEs. This, he said, “does not bode well.”

Claiming that institutional owners of rental properties were being “scapegoated” for increased housing CONTINUED ON PAGE 12

NATIONAL MORTGAGE PROFESSIONAL MAGAZINE | APRIL 2022 |

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RECRUITING, TRAINING, AND MENTORING CORNER

BIG BUCKS LANDLORDS CONTINUED FROM PAGE 11

costs and rental prices, Griffith of the Heritage Foundation pointed out that they own a scant 0.2% of all the country’s single-family rentals and just 1% of all rentals. “Not in a single state do institutional investors own more than 1 in 100 of all available housing in the state,” he testified.

Griffith maintained that the primary drivers of rising prices nationally are government subsidies, the Federal Reserve, and local building regulations.

Specifically, he said, Fannie and Freddie “continue to dominate the mortgage market.” And the Fed has driven down mortgage interest rates and fueled a rise in housing costs by purchasing $1.2 trillion of Fannie-Freddie securities.

But neither Toomey nor the two think-tank witnesses addressed the complaints of tenants, of which there were many, or those of legislators on the Democratic side of the aisle. Those

voices maintained that “deep pocket” investors were buying up rental properties of all ilk, raising rents while making few improvements, failing to maintain their properties and evicting long-time tenants because they couldn’t pay higher rents, sometimes for reasons beyond their control.

“Unlike Mom and Pop landlords, they have little empathy” for their residents, Sally Martin, director of building And housing for city of Cleveland, testified. “Rents go up, sometimes by 50% or more, and maintenance goes down.” Added

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| NATIONAL MORTGAGE PROFESSIONAL MAGAZINE | APRIL 2022

Michael Waller, executive director of the Georgia Appleseed Center for Law and Justice: Residents who choose to move rather than pay higher rents often are “hit with termination fees, sometimes three times their rent.”

Another frequent complaint is the lack of transparency in finding the true owner of a rental property. Often, owners stand behind limited liability corporations and/

“I cannot express how grateful I am to have a broker relationship with Ridgewood. Time and time again, you’re the lender I count on for personal attention and unparalleled service.”

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or property management companies. “We see this all the time,” Brooklyn, N.Y., tenant Aneta Molenda told the committee.

“It’s very convoluted trying to investigate who owns what.”

Cleveland’s Martin agreed. “It’s almost impossible to track them down,” she said of owners. “They hide.”

FEE SIMPLE Waller said his group has found fees charged by profitseeking institutional landlords in Georgia go far beyond late fees. The charges include one-time activity fees, pest control fees, utility service fees, a renter’s insurance fee/penalty, valet trash fees, package locker fees, common area electric fees, amenity fees, property management fees, month-to-month penalties, upfront first and last months’ rent, safety deposits equal to one month rent, pet deposits, application fees, and early termination fees triple the amount of a month’s rent.”

Noting that his state’s laws are notoriously landlord friendly, he also testified that corporate landlords “often abuse the eviction system and safety laws to a greater degree than other landlords.” And saying big-gun owners favor eviction because “they are so quick,” tenants have little or no time to obtain legal advice or rental assistance. “Profit-mongering at the expense of family and community well-being is not ‘investment in affordable housing’,” Waller told the committee.

And all that was just the second day of hearings. The first day was a listening session, after which Chairman Brown characterized their comments on the Senate floor.

“Their stories all make it clear the real harm the Wall Street business model does to workers’ lives,” he said.

“It’s an increasing problem in every region, from big cities to rural towns. Deep-pocketed investors come into a community they have no connection to, buy up homes, raise rents, cut services and don’t deliver on any of their promises.

These out-of-town — maybe even out-of-country — investors are raising rents by 50%, issuing eviction notices, and leaving toxic mold and pest infestations to grow worse, all to pad their own bottom lines.”

The Ohio Democrat vowed that his committee would stop listening to Wall Street and start listening to people — like the Minneapolis working mother who told the panel her persistent complaints about her home’s flooded basement and dangerous garage went unanswered until the city stepped in because of code violations.

Or the Montana woman who lives in a manufactured home community where she rents her lot from a private equity firm that “cut back on all amenities” but still raised rents and added fees for water and sewer and trash removal. In all, the changes amounted to an 86% increase in rents.

Or the Maryland man who lives in a building where the hallways are falling in, the wood floor is buckling, there’s no heat or air conditioning, and cockroaches and mice abound.

“They don’t want to fix anything, including the stove and the refrigerator and the heater,” he said. n

Lew Sichelman has been covering the housing and mortgage sectors for 52 years. His syndicated column appears in major newspapers throughout the country. He also has been the real estate editor at two major Washington, D.C., dailies and spent 30 years on the staff of National Mortgage News, formerly National Thrift News.

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Your Crew Director will work directly with you, providing insights and making your business stronger. It’s personalized support like never before. Whether you’re on the East or West Coast, you’ll have access during your working hours. All that gives you the ability to close loans faster with more certainty. When you want to grow and strengthen your business, Rocket Can. Learn more at RocketProTPO.com.

Rocket Mortgage, LLC; NMLS #3030; www.NMLSConsumerAccess.org. Equal Housing Lender. Licensed in 50 states. AL License No. MC 20979, Control No. 100152352. AR, TX: 1050 Woodward Ave., Detroit, MI 48226-1906, (888) 474-0404; AZ: 1 N. Central Ave., Ste. 2000, Phoenix, AZ 85004, Mortgage Banker License #BK-0902939; CA: Licensed by the Department of Financial Protection and Innovation under the California Residential Mortgage Lending Act; CO: Regulated by the Division of Real Estate; GA: Residential Mortgage Licensee #11704; IL: Residential Mortgage Licensee #4127 – Dept. of Financial and Professional Regulation; KS: Licensed Mortgage Company MC.0025309; MA: Mortgage Lender License #ML 3030; ME: Supervised Lender License; MN: Not an offer for a rate lock agreement; MS: Licensed by the MS Dept. of Banking and Consumer Finance; NH: Licensed by the NH Banking Dept., #6743MB; NV: License #626; NJ: New Jersey – Rocket Mortgage, LLC, 1050 Woodward Ave., Detroit, MI 48226, (888) 474-0404, Licensed by the N.J. Department of Banking and Insurance.; NY: Rocket Mortgage, LLC, 1050 Woodward Ave., Detroit, MI 48226 Licensed Mortgage Banker-NYS Department of Financial Services; OH: MB 850076; OR: License #ML-1387; PA: Licensed by the Dept. of Banking – License #21430; RI: Licensed Lender; WA: Consumer Loan Company License CL-3030. Conditions may apply. ©2000-2022 Rocket Mortgage, LLC. All rights reserved. Lending services provided by Rocket Mortgage, LLC, a subsidiary of Rocket Companies, Inc. (NYSE: RKT). “Quicken Loans” is a registered service mark of Intuit Inc., used under license.

Rocket Mortgage, 1050 Woodward Ave., Detroit, MI 48226-1906

SPONSORED BY

HOW NMP’S MONTHLY SECTION OF HANDS-ON PRACTICAL ADVICE

BUILD A BROKER Don’t Get Caught Flatfooted When The Market Suddenly Swivels YOUR FIRST MILLION DOLLARS Pick Up A Book — An Actual Book — And Discover The Impact Print Can Make Knowledge Is Powerful — How To Show Others You Have It CAREER TICKER: People On The Move

PEOPLE ON THE MOVE //

> Guaranteed

Rate appointed Sanjay Gupta as its new chief marketing officer and chief digital officer.

> Union

Home Mortgage, an independent mortgage banking company, has selected Tyler Gossett as area sales manager in Kentucky.

> Cherry Creek

Mortgage, a nationwide, full-service mortgage lender, hired Paul Yarborough as vice president of IT operations.

> Panorama

Mortgage Group, a national mortgage company headquartered in Nevada, named Ryan Rathert its chief financial officer.

NATIONAL MORTGAGE PROFESSIONAL MAGAZINE | APRIL 2022 |

15

BUILD-A-BROKER: HANDS ON PRACTICAL ADVICE BUILD-A-BROKER PREP 101

How To Prepare Your Brokerage For Sudden Market Changes Look for signs, and be ready to take action

BY ZOE DEVITTO, SPECIAL TO NATIONAL MORTGAGE PROFESSIONAL

T

he mortgage brokerage world is dynamic and constantly changing, with trends and tactics shifting all the time.

So it’s important for small businesses to prepare for the unexpected, even if it sounds impossible.

You don’t want your business to fail, and it all depends on how you plan for sudden market changes.

With more than 32 million small businesses operating in the U.S., no one will look out for your business but you.

Fortunately, there are helpful guides like this to keep Zoe Devitto you on the right track and steer you in the direction you should be going.

We’ve gathered the best ways you can prepare for market changes so that the next time it happens — and it will happen — you won’t have to panic or fear the downfall of your business.

HOW TO IDENTIFY MARKET CHANGES QUICKLY Detecting market changes may

sound closer to rocket science than hand painting, but it’s not impossible.

As long as you know what to look for, you’ll be able to identify market changes and prepare for them quickly.

It’s essential to respond promptly to any changes to mitigate any damage they could cause.

Here are a few things to keep an eye on so you’ll know when the market is

changing: • Average sales figures fluctuations • Customer acquisition rate changes • Gross profit decreases • Customer retention rates changing suddenly • Web leads and traffic spiking or dropping • Ways to prepare for sudden changes.

Knowing when market changes will

PEOPLE ON THE MOVE //

> Churchill

Mortgage, a Brentwood, Tenn., provider of mortgages across 48 states, announced Darren Shaffer as its chief technology officer.

16

> Mortgage

Cadence, a subsidiary of Accenture, has hired Kelly Booth as senior vice president of sales.

> Freddie

Mac named Wendell Chambliss, a 20-year veteran, as senior vice president and chief diversity & inclusion officer.

| NATIONAL MORTGAGE PROFESSIONAL MAGAZINE | APRIL 2022

> Union

Home Mortgage selected Cyndi Garza to vice president of national business development.

SPONSORED BY

happen is one thing; and being adequately prepared is another.

The following tips will help you and your small business be ready for anything unexpected relating to the market.

1. Set aside an emergency fund.

Emergency funds can save your business from going down completely should an unexpected market change happen before you could see it coming. You must have a cash buffer to protect your business in dire times.

Although it can be difficult to put away money (especially if your company is still growing and needs all the cash it can get), you must not neglect this point. Aim to have an emergency fund that will keep you going for six months to a year, at the minimum.

2. Identify new markets you could expand into.

If you’ve got your brokerage focused on only one market, you’re more likely to be negatively affected on a deep level.

For that reason, you don’t want to put all your eggs into one basket.

Instead, diversify your business and find new markets that you could tap into. For example, if you have specialized in FHA lending, look to Non-QM possibilities. Or, if you’re active in a limited geography, look for opportunities by expanding your lending footprint.

Entering new markets is also an excellent way to grow your small business and give yourself a competitive advantage.

3. Don’t stop innovating.

Small business owners know that innovation keeps them alive and thriving among the competition. If you want to prepare for sudden market changes, innovation is a core element to focus on.

Your business must never stand still; it must be everchanging and evolving. Listen to your clients and find new ways to do business in a way that keeps them satisfied and coming back for more. Can you start selling your services through social media platforms like Facebook, Instagram, and Pinterest? Or, can you build a website that changes the way you sell?

Get creative and think outside the box.

We Have Mortgage Jobs.

CONTINUED ON PAGE 18

> Planet

Home Lending hired Vince Caicedo as branch manager to lead a new Jacksonville team.

> American

Advisors Group, which provides home equity solutions for seniors, announced Scott Slifer as its new chief administrative officer.

• Branch Manager • Business Development Manager • Client Relationship Manager • Client Relationship Specialist • Collateral Asset Manager • Commercial Loan Officer • Credit Analyst • Licensing Assistant • Loan Officer • Loan Mitigation • Post Closing QC Expert • Loan Administration Manager • Processor • Regional Vice President • REO Closer • Retail Branch Manager • Reverse Mortgage Specialist • Sales Manager • Underwriter • Wholesale Account Exec • And MORE! Resposes are from highly-qualified candidates. Your ad can also be [osted on Indeed and SimplyHired as a FEATURED JOB, on Craigslist in most cities, Googlebase, Oodle, Juju, CareerMetaSearch, TopUSAJobs, Jobalot and MORE! Pay-per-use RESUME BANK.

findmortgagejobs.com

NATIONAL MORTGAGE PROFESSIONAL MAGAZINE | APRIL 2022 |

17

BUILD-A-BROKER: HANDS ON PRACTICAL ADVICE SPONSORED BY

5. Keep costs low.

Cutting costs will help you set aside an emergency fund and keep your business’s cash flow going if market changes start suddenly.

There are several ways to keep costs low, like expanding your website’s functionality with an order form to reduce the amount of work staff need to do on phones. You could also consider taking small business loans only with low-interest rates, limiting excessive marketing investments, and using the right business software and tools.

Additionally, you can limit your focus to only the most important things: providing excellent products and dedicated customer service.

SUDDEN MARKET CHANGES CONTINUED FROM PAGE 17

4. Take care of staff health.

Your staff is what carries your business, and you must keep their health in mind. Make sure you give your workers a good work/life balance. Your business should never be the reason why your employees are unhappy or unhealthy.

Happy workers will be more

productive and loyal, improving not only sales and customer relationships, but helping your business thrive so market changes won’t affect it as fundamentally. On the other hand, it has been proven that poor health can make employees unhappy, which will negatively affect their productivity.

6. Create a contingency plan.

Last, but not least, be prepared for the worst and embrace the risk. Plan for disappointing and difficult cash flows and sales dry spells. Don’t give up when things get challenging, and prepare contingency plans. Will you lower prices? Seek new customers? Try new marketing tactics?

Your plan depends on your unique business and circumstances, so make sure you keep yourself and your employees in mind.

Sudden market changes don’t have to be scary. Unexpected market changes can be stressful for small business owners, but now that you know how to prepare for them, you can keep calm and rest assured your business will survive. Remember: always plan ahead, never stop innovating, and look for business opportunities. n

Zoe Devitto is a content marketing strategist for SaaS brands like FollowUpBoss, Mention, and more.

PEOPLE ON THE MOVE //

> First

Republic Bank, based in San Francisco, announced the appointment of Mike Roffler as its CEO.

18

> Union

Home Mortgage appointed Bryan Wright to vice president of national sales.

| NATIONAL MORTGAGE PROFESSIONAL MAGAZINE | APRIL 2022

> Non-QM

lender Deephaven Mortgage named Lisa Heitzmann as chief operating officer.

> Go Prime

Mortgage has promoted Kevin Neely to director of national sales.

In 2022, opportunity runs deep.

Everything is changing. Shouldn’t your loan options?

The number of homebuyers unable to qualify for a traditional mortgage is expected to hit an all-time high in 2022. Entrepreneurs, the self-employed, business owners, property investors — millions of creditworthy homebuyers will need a Non-Agency/Non-QM loan. Deephaven is there for them with a full suite of programs and products, each with its own set of flexible features and terms. By joining our network of independent mortgage bankers and brokers, you can be there for them too.

deephavenmortgage.com Deephaven Mortgage® LLC. All rights reserved. This material is intended solely for the use of licensed mortgage professionals. Distribution to consumers is strictly prohibited. Program and rates are subject to change without notice. Not available in all states. Terms subject to qualification.

Nmlsconsumeraccess.org NMLS #958425 Deephavenmortgage.com

BUILD-A-BROKER: HANDS ON PRACTICAL ADVICE SPONSORED BY

YOUR FIRST MILLION DOLLARS

Today A Reader, Tomorrow A Leader Wisdom flows from the pages

BY HARVEY MACKAY, SPECIAL TO NATIONAL MORTGAGE PROFESSIONAL

Y

ears ago I was on a flight from Minneapolis to New York when a businessman sitting next to me reached in his briefcase and pulled out my first book, “Swim With the Sharks Without Being Eaten Alive.”

I was going crazy inside and blurted out, “How do you like that book?”

“Well,” he said, “My boss gave me a choice of three business books to read.

I picked this one because it was the shortest.”

Talk about a letdown, but at least he was reading. And I sincerely hope that the short chapters and many business lessons gave him plenty of takeHarvey Mackay home value.

In honor of Dr. Seuss’ birthday, March is designated as National Reading Month — a month to motivate Americans of all ages to read every day. Reading is fun and has many benefits, regardless of your age. It’s a key component of education and professional development. Books illuminate your imagination, enhance your vocabulary, build confidence, and improve memory, writing and communication skills.

Reading also has immediate and longlasting health benefits such as increased cognitive function, empathy and decreased levels of stress.

I love this quote from famed speaker Charlie “Tremendous” Jones: “Don’t read to be big, read to be down to earth. Don’t read to be smart, read to be wise. Don’t read to memorize, read to realize. Don’t read to just learn, read to sometimes unlearn. Don’t read a lot, read just enough to keep yourself curious and hungry, to learn more, to keep getting younger as you grow older.”

20

People’s lives change in two ways — the people they meet and the books they read.

ALWAYS VALUE INSIDE Charlie Jones first uttered something similar to this, and I have repeated this point every speech I’ve given to corporate audiences. I believe it’s that important. You cannot open a book without learning something.

“There is more treasure in books than in all the pirates’ loot on Treasure Island,” said Walt Disney. “And best of all, you can enjoy these riches every day of your life.”

Whenever I read a book, I want to get at least one idea from it that I can use the rest of my life. The same with listening to speakers. If we can do this, there’s no way we can’t all become more successful.

Books are easier to access now than ever before. I keep several downloaded on my phone and iPad when I’m traveling — much easier than when my briefcase was bulging with reading material in the “old days.” Audiobooks have long been one of my go-to pastimes.

Bestselling author Og Mandino said: “Many years ago, when I was just about as complete a failure as one can become, I began to spend a good deal of time in libraries, looking for some answers. I found all the answers I needed in that golden vein of ore that every library has.”

Interesting that April is National Library Month.

books than ever are being published and more copies are being sold. Here’s my prediction: Traditional paper pages will not become extinct anytime soon. There’s just something about turning the pages that keeps you engaged.

Books are a great source to learn from top mentors in all subjects even when you can’t meet with them personally. They write books to help people. Reading about experiences is almost the same as living it.

World-renowned entrepreneur and author Jim Rohn said, “Everything you need for your better future and success has already been written. And guess what? It’s all available.”

I mostly agree with Jim — with one deviation.

There are so many excellent books written every year, and if the information in one doesn’t grab your attention, you can try another author’s approach.

Inscribed on the Thomas Jefferson Building at the Library of Congress are the first eight words of this quotation by philosopher and writer Henry David Thoreau that reads: “Books are the treasured wealth of the world and the fit inheritance of generations and nations. Their authors are a natural and irresistible aristocracy in every society, and more than kings or emperors exert an influence on mankind.”

Do you realize that just 200 years ago, only about 12 percent of the world’s population could read and write? Today that number is between 85%-90%. Just imagine the progress made as the world becomes more literate. The possibilities are limitless.

People’s lives change in two ways — the people they meet and the books they read.

THE PRINTED WORD Radio, television, computers, and the Internet were proclaimed to be the final replacement for conventional books when each first became popular. But more

| NATIONAL MORTGAGE PROFESSIONAL MAGAZINE | APRIL 2022

Mackay’s Moral: Reading helps install new software in brains. n

BUILD-A-BROKER: HANDS ON PRACTICAL ADVICE SPONSORED BY

MARY KAY SCULLY

YOUR FIRST MILLION DOLLARS

Tech Tips For Marketing Yourself Your computer keyboard can be your best marketing partner

BY MARY KAY SCULLY, CONTRIBUTING WRITER, NATIONAL MORTGAGE PROFESSIONAL

S

o, you’re great at your job. That may be easy for you or your colleagues to see, but the milliondollar question is: How do you get that across to borrowers? You must be able to demonstrate your knowledge and skills to draw customers in. How do you do that, especially today when everything is remote?

I have a couple of tips for using technology to your advantage that will help you effectively reach customers and market yourself.

VIDEO TIPS In the COVID-19 era, we’re not interacting as much in person anymore. It’s rare that you’ll sit across the desk from your customers and get to know them face-to-face.

This is why video is so critical.

I would say we can bypass the obligatory “make sure your background is clean,” “make eye contact with the camera,” “be sure you’re centered in the camera” conversation and dive deeper into video, but even after two years of being remote, some people could still use a reminder. Remove any distraction from your frame and remove

in-frame items that may end up distracting you.

Just because your background is tidy, doesn’t mean it’s not distracting.

I recently attended a Zoom meeting where the presenter was on video. This individual was positioned in front of a child’s bed sporting a patchwork quilt loaded with stuffed animals. While the background was “clean” per se, I was so distracted by it that I missed the presenter’s takeaways on key policy issues. While you may laugh, let this be a reminder that what your viewers see can often be louder than what you say.

So, how can you make sure what you’re saying is the main focus of your video? How can you make it engaging and interesting for viewers?

With live video, be sure to constantly interact. It’s more difficult to read the room when you’re behind a screen. Silences

22

can be more awkward than they would be when face-to-face. Be extra animated so you keep viewers’ attention. It is too easy for their minds to wander when you are not physically sitting in front of them. Tone and volume are critical here.

With recorded video, be sure to include a call to action. While you can’t interact live, you still want to make sure your customer is engaged in some way. Also, don’t be afraid to outline your video so you stay on task and ensure customers get all the info they need.

Regardless of the type of video, be sure your personality shines through.

You want your customers to feel like they know you, whether you’ve met in person or not.

SOCIAL MEDIA TIPS When engaging customers via social CONTINUED ON PAGE 24

| NATIONAL MORTGAGE PROFESSIONAL MAGAZINE | APRIL 2022

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NATIONAL MORTGAGE PROFESSIONAL MAGAZINE | APRIL 2022 |

23

BUILD-A-BROKER: HANDS ON PRACTICAL ADVICE SPONSORED BY

TECH TIPS

CONTINUED FROM PAGE 22

media, there are a few more areas to consider. First of all, before you do anything, check your company’s social media policies.

Every company is different, so you want to be sure you are following the rules and effectively supporting your organization via social media.

There is a fine line between what qualifies as a post and what qualifies as an ad per laws like RESPA, SAFE Act, the Fair Housing Act and Reg O that regulate advertisements by MLOs and their companies. These are mainly regulated by the CFPB and FTC. Make

sure you know where that fine line is drawn — and don’t cross it.

Just like with video, make your posts engaging. Add a call to action so customers know what to do or how to respond. Also, be sure to share info that’s helpful to your customers.

Providing value is the best way to “sell” yourself and position yourself as a knowledgeable resource. Make informational posts outside of your subject matter expertise too; being relevant to other business professionals that follow you is the best way to build your brand.

Finally, know your channels. Each social platform has a slightly different audience and post format. Keep your

Providing value is the best way to “sell” yourself and position yourself as a knowledgeable resource.

tweets short and post frequently.

For LinkedIn, share more long-form content. Videos perform better on Facebook and Instagram, and you have the added benefit of going live. With Facebook, be prepared to market more toward demographics like Gen X and Baby Boomers, while Instagram is more appealing to a younger audience.

Marketing yourself may be out of your comfort zone, but it is one of the best ways to not only attract new customers, but to demonstrate the value you can provide. Engaging with customers through the abundance of channels we have today can promote customer success as well as your own. n

Mary Kay Scully is the director of customer education at Enact, leading the development of the company’s customer education curriculum. The statements in this article are solely her opinions and do not necessarily reflect the views of Enact or its management.

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| NATIONAL MORTGAGE PROFESSIONAL MAGAZINE | APRIL 2022

N O N - Q M L E N DE R RE SOU RC E GU IDE

Acra Lending

Angel Oak Mortgage Solutions

Lake Forest, CA

Atlanta, GA

Arc Home LLC

Mount Laurel, NJ Multi-channel mortgage leader with

Acra Lending is the leader in Non-

We offer alternative mortgage solutions

QM Wholesale and Correspondent

for originators throughout the country

lending programs. Offering a range of

helping borrowers who don’t fit Agency

mortgage solutions.

programs and services geared toward

guidelines. We are pioneering a fresh

helping mortgage professionals and

approach to today’s mortgage lending

When it comes to choosing your

borrowers achieve their purchase and

challenges helping partners to grow

investment goals. We are committed

their business.

to providing simplicity, consistency and an optimal customer experience.

angeloakms.com (855) 631-9943

acralending.com

info@angeloakms.com

(888) 800-7661 sales@acralending.com

LICENSED IN: AL, AZ, AR, CA, CO, CT, DC, DE, FL, GA, IL, IN, IA, KS, KY, LA, ME, MD,

LICENSED IN: AL, AZ, AR, CA, CO, CT,

MI, MN, MS, MT, NE, NV, NH, NJ, NM, NC,

DC, DE, FL, GA, ID, IL, IN, KS, KY, LA, ME,

ND, OH, OK, OR, PA, RI, SC, SD, TN, TX,

MD, MI, MN, MT, NE, NV, NH, NJ, NC,

UT, VA, WA, WV, WI, WY, Puerto Rico, U.S.

OK, OR, PA, SC, TN, TX, UT, VA, VT, WA,

Virgin Islands

WI, WY

exceptional service and comprehensive

lending partner, there are many things to consider. Our products set the standard in the industry for innovation.

Since that innovation is in our DNA, we will always be on the cutting edge of what matters most to you and your borrowers. At Arc Home, our priority is to provide the best customer experience from registration to closing, and we continue to invest in that philosophy every day. business.archomellc.com (844) 851-3600 sales@archomeloans.com LICENSED IN: AL, AK, AZ, AR, CA, CO, CT, DC, DE, FL, GA, ID, IL, IN, IA, KS, KY, LA, ME, MD, MA, MI, MN, MS, MO, MT, NE, NV, NH, NJ, NM, NY, NC, ND, OH, OK, OR, PA, RI, SC, SD, TN, TX, UT, VT, VA, WA, WV, WI, WY

Road Trip!

J

oin Originator Connect Network as we traverse the country, bringing together hundreds of mortgage brokers, loan originators and bank and credit union lending officers, for an event full of education, networking and fun.

See our partial sample of upcoming events here, or visit our site for our full calendar at originatorconnectnetwork.com.

N O N - Q M L E N DE R RE SOU RC E GU IDE

Civic Financial Services Redondo Beach, CA

CIVIC delivers fast, honest, simple lending for real estate investors.

Description of your products or services.

CIVIC Financial Services is a private money lender, specializing in the financing of non-owner occupied residential investment properties.

CIVIC provides Mortgage Brokers and Real Estate Investors with a fast and cost effective funding source for their real estate investment needs.

Deephaven Mortgage

First National Bank of America

Charlotte, North Carolina

East Lansing, MI

Founded in 2012, Deephaven is

With over 65 years of lending

a national, Non-Agency/Non-QM

experience, First National Bank of

mortgage provider.

America specializes in Non-QM loans, nationwide.

A full-service innovator in the NonAgency/Non-QM mortgage space

• Alternative Income Documentation

helping millions of Americans

Options

unable to qualify for a traditional,

• 12 months only of income history

government-backed mortgage to

• Self-Employed/1099

achieve their dreams of homeownership.

• ITIN or SSN

Available through both wholesale

• Recent Credit Events

and correspondent channels, our

Our alternative mortgage solutions

differentiator is our borrower-centric

are designed to help people turn

culture and service delivery model.

civicfs.com (877) 472-4842 info@civicfs.com LICENSED IN: AZ, CA, CO, FL, GA, HI, ID, IL, IN, LA, MD, MA, MI, MN, NV, NJ, NC, OH, OK, OR, PA, SC, TN, TX, UT, VA, WA, WI

homeownership dreams into a reality in

Particular strengths include our own

the Retail, Wholesale or Correspondent

in-house underwriting and collaborative

space

teams that directly support our national network of independent mortgage

Visit:

brokers and loan officers.

www.fnba.com/wholesale www.fnba.com/correspondent

deephavenmortgage.com

www.fnba.com/mortgage

(800) 983-0457

Equal Housing Lender

info@deephavenmortgage.com

fnba.com/wholesale

LICENSED IN: AL, AK, AZ, AR, CA, CO, CT,

(800) 400-5451

DC, DE, FL, GA, HI, ID, IL, IN, IA, KS, KY, LA,

requests@fnba.com

ME, MD, MA, MI, MN, MS, MT, NE, NV, NH, NJ, NM, NC, ND, OH, OK, OR, PA, RI, SC,

LICENSED IN: Continental U.S.

SD, TN, TX, UT, VT, VA, WA, WI, WY

Non-QM Lender Resource Guide cont’d. next pg.

MAY

5

California Mortgage Expo I RVI NE , CA N M LS RENEWA L CL A SS

MAY

11

Utah Mortgage Show PA R K CITY, UT NMLS RENEWA L CL A SS

N O N - Q M LE N DE R RE SOU RC E GU IDE

Global Integrity Finance LLC

Luxury Mortgage Corp.

PCF Wholesale

McKinney, Texas

Stamford, CT

Tustin, CA

DSCR Rental NO DOC Loans As a direct, private lender, Global Integrity Finance takes a common-

Non-QM, Wholesale, Delegated

Build your 2022 pipeline with

Correspondent, Non Delegated

PCFWholesale.com , the home of

Correspondent

the EZ DSCR and Alt Choice Non

sense approach to underwriting,

The Simple Access® Non-QM suite of

with all approvals made in-house.

products was built around the idea

We are dedicated to providing quick

that it doesn’t have to be complicated

responses to time-sensitive loans,

to finance a home. We have created a

often times with the ability to close in

diverse selection of borrower friendly

as few as 3 business days. At Global

programs that are simple, innovative,

Integrity Finance, we value referrals

and flexible. For more information on

and our brokers are protected. We

our Correspondent division, visit www.

are committed to the highest level of

luxurymortgagecorrespondent.com

QM Products. We make NonQM E-Z. Direct Wholesale Lender Licensed in 38 States. We love 1-4 and 5-8 unit properties. Ask about our Preferred Lender Program and our on time closing commitments to you! pcfwholesale.com (714) 955-5700 Marketing@pcfwholesale.com

customer service, because our success thrives in building relationships.

luxurymortgagewholesale.com

LICENSED IN: AL AK AZ AR CA CO CT

(949) 516-9710 globalintegrityfinance.com

DC DE FL GA ID IL IN IA KS KY LA ME

tpomarketing@luxurymortgage.com

MD MA MI MN NV NH NJ NM NC OH

(214) 548-5190 toby@globalintegrityfinance.com

OK OR PA RI SC TN TX UT VA

LICENSED IN: AL, AK, CA, CO, CT, DC, DE, FL, GA, IL, LA, ME, MD, MA, MI, MN, NV, NH,

LICENSED IN: AL, AR, CO, CT, DC, DE,

NJ, NM, NY, NC, OH, OR, PA, RI, SC, TN, TX,

FL, GA, HI, ID, IL, IN, IA, KS, KY, LA, ME,

UT, VA, WA, WI, WY

MD, MA, MI, MN, MS, MO, MT, NE, NH, NJ, NM, NY, NC, OH, OK, OR, PA, RI, SC, TN, TX, UT, VT, VA, WA, WV, WI

MAY

24

Suncoast Mortgage Expo TAMPA , F L N M LS RENEWA L CL A SS

JUN

8

Motor City Mortgage Expo DE TR O IT, M I NMLS RENEWA L CL A SS

Just Added!

NO N - Q M L E N D E R RE S O UR C E GU IDE

Quontic Bank

Sprout Mortgage

New York, NY

East Meadow, NY

No Ratio & Lite Doc — Owner Occupied

We successfully deliver uncommonly

& Investor

good solutions to customers whose home financing needs aren’t

Our unique Community Development

commonly met elsewhere. iQualifi,

Loan programs help historically

our proprietary pricing engine, helps

excluded borrowers look beyond

mortgage professionals quickly and

income documentation to help make

easily identify Sprout loan products

homeownership dreams a reality.

that may work for their customers.

Quontic is exempt from Dodd Frank’s

iAnalyze, our proprietary bank

ATR requirements. This enables us to

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| NATIONAL MORTGAGE PROFESSIONAL MAGAZINE | APRIL 2022

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| NATIONAL MORTGAGE PROFESSIONAL MAGAZINE | APRIL 2022

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The Non-QM Pig Pile Suddenly, everyone’s in the scrum. Analysts say the odds aren’t great.

34

| NATIONAL MORTGAGE PROFESSIONAL MAGAZINE | APRIL 2022

BY DOUG PAGE, STAFF WRITER, NATIONAL MORTGAGE PROFESSIONAL MAGAZINE

W

hen United Wholesale Mortgage, the Big Kahuna of originations, decided early this year that it was pushing forward into the Non-QM lending market, it was the biggest single indicator yet that lenders and LOs are looking to nontraditional mortgages to make up for a huge decline in traditional volume.

Where Non-QM — the product for the self-employed, the independently wealthy, the 1099 and K1 borrower — was largely a niche product over the past decade, UWM’s entry helped move its reputation mainstream. But the Pontiac, Mich.-based lender isn’t the only mortgage company with unconventional eyesight. Dozens of lenders have put Non-QM at the forefront of their business plan. Yet what no one knows is whether the market will be able to support all the companies piling on.

HOW BIG IS THE NON-QM MARKET? The conventional mortgage industry tracks volume through the Mortgage Bankers Association. But since there isn’t a Non-QM mortgage association, it’s hard to say what the trend lines for this kind of lending are. S&P Global said Non-QM loan volume in 2021 was $28.6 billion or .7% of the mortgage market.

“Non-QM will likely see growth in 2022 as originators become more bullish on this subsector, especially with agency-eligible refinancing taking a backseat with interest rates on the rise,” said an S&P Global Ratings report in January. The same report says NonQM lending will come in at $40 Jeremy Schneider, billion this year. analyst, S&P Global But two predictions, one from S&P Global analyst Jeremy Schneider and another from a Non-QM insider — Angel Oak Mortgage Solutions’ Executive Vice President Thomas Hutchens — see Non-QM loan volume surging in the coming months. Schneider contradicted his company’s report and estimated that Non-QM lending will be $80 billion this year while Hutchens predicted as much as $100 billion — or about 4% of the overall mortgage loan volume predicted for 2022.

Many of the top lenders in the

Non-QM space see their loan volume growing this year, with A&D Mortgage CEO Max Slyusarchuk saying his company will do at least $4 billion in Non-QM lending, up from $2 billion last year. Acra Lending CEO Keith Lind says his firm’s on track to write $3.5 billion in Non-QM loans, up from $2 billion in 2021. Angel Oak sees its Non-QM loan volume coming in at $7.5 billion this year, up from $3.9 billion, says Steven Winokur, its marketing director.

Another newcomer to NonQM lending, Champions Funding LLC, which opened its doors in early March, did $20 million in loans during its first month, said chief operations officer Natalie Verrette.

Thomas Hutchen, “$1 billion, that’s Executive Vice the objective President, Angel Oak this year,” she Mortgage Solutions replied, when asked about the company’s goals this year.

EYES WIDE OPEN What will Non-QM lending amount to this year? There are two sets of views and they’re based on where people sit.

The first one, from the analyst community, including Schneider and UBS’s Brock Vandervliet, says it doesn’t grow more than 5% of the overall mortgage market. The Mortgage Bankers Association predicts $2.59 trillion in mortgage originations in 2022.

“Non-QM lending will do what it’s done, 5% of the market. It’s not going to be 25% of the market,” Argus research analyst Kevin Heal asserts.

Those inside the Non-QM industry see it differently.

“The analysts are completely wrong,” countered ACC Mortgage CEO Robert Senko. “They aren’t on the street talking to real estate agents or with loan

officers. They’re crunching numbers in a cubicle thinking that’s indicative of the market. If they say Non-QM lending is 5% of the market, I’d be more bullish.

I think 10% is a reasonable goal.” That translates to about $259 billion.

“Analysts have never been a loan officer who must start looking for solutions when business dries up. That’s the driver of [the growth],” Senko adds.

He expects his firm to make close to $1 billion in Non-QM loans this year, up around 40% from last year.

Sprout Mortgage President Shea Pallante also thinks Non-QM lending could come in at 10% of mortgage loan volume for three reasons: the number of gig workers, the surge Keith Lind, CEO, in home prices and Acra Lending home foreclosures.

Another “driver in our view of increased demand for Non-QM comes from the recent increase in home foreclosures — the resolution of which may present an increase in investment real estate purchase,” he said in an email to National Mortgage Professional Magazine. “With the right continuation and combination of these factors, Sprout believes that 10% is a potential.”

Angel Oak’s Steve Winokur differs, saying, “Our long-term vision is that it can reach 10%, but 5% this year is accurate. If it weren’t for COVID-19, I think we would have hit $100 billion by now.” Even 5%, though, would be about $125 billion based on the MBA’s estimate of overall originations at $2.5 trillion.

Angel Oak’s expectation, prior to the pandemic, was that Non-QM lending would double in 2020 to $50 billion and would double again in 2021 to $100 billion, said Winokur.

“There’s borrower demand for Non-QM loans but originators are still learning about Non-QM,” Winokur said, explaining why his company sees NonQM lending at between $80 billion to $100 billion this year, or closer to 3-4%.

CONTINUED ON PAGE 36

NATIONAL MORTGAGE PROFESSIONAL MAGAZINE | APRIL 2022 |

35

NON-QM PIG PILE CONTINUED FROM PAGE 35

Acra Lending Vice President Michael Kirk disagrees with Winokur, suggesting there are about 8 million self-employed workers who need Non-QM to buy their primary residence and another 20 million investors who own fix and flips, condotels, Airbnb, and apartments, which is why he believes Non-QM will be stronger than previously.

“Rates have gone up, sure, but since I’ve been in this industry rates go up and down, up and down, and up and down. But, again, investors can’t stop doing business because that’s how Shelly Griffin, they feed their senior vice president, families,” Kirk Deephaven Mortgage said. “So where exactly is it [NonQM lending] going? I don’t know. I leave it up to the good Lord. But I can tell you there is a market of borrowers that need Non-QM financing and I do believe it’s more than 5%,” of the total mortgage market.

COUNTERING CONVENTIONAL WISDOM The traditional mortgage market looks like a picked-over buffet this year. The table, once graced with a feast, is left with crumbs.

Instead of loan volume coming in at or above $4 trillion, like it did the last two years, the expectation this year is that it contracts about 40%, to around $2.5 trillion. Refis are expected to take the biggest hit, shrinking more than 60% to $860 billion from last year’s $2.3 trillion, says the Mortgage Bankers Association.

The previous forecast — now in the trash — was for a gradual increase in interest rates this year. But inflation’s spike plus the Federal Open Market Committee’s rapid increase in the Federal Funds rate, with more likely on the way, pushed up 30-year fixed mortgage rates, causing the real estate market to shrink, says UBS analyst Brock Vandervliet.

To originators holding onto the idea

36

that conventional mortgages, backed by the GSEs, are the only ones to offer, it will likely be a challenging year. To those holding an alternative view, there’s a cornucopia of opportunity. But it involves selling and writing different kinds of mortgages. And that’s why so many wholesalers are suddenly becoming disciples of the unconventional.

Non-QM mortgages are unlike the ones purchased by Fannie Mae or Freddie Mac because applicants’ incomes are vetted differently. Unlike someone applying for and receiving a conventional mortgage, whose income is proven with an employerprovided W-2 tax form, borrowers under the NonQualified Mortgage umbrella are often Shea Pallante, self-employed, president, meaning their Sprout Mortgage incomes can be more challenging to verify. Lenders and mortgage originators usually use bank statements to determine the income of a prospective Non-QM borrower. And it’s private investors buying these notes, not GSEs.

types of mortgages because their income cannot be verified in a manner that’s acceptable for a conventional mortgage.

“Purchases and refis, they’re all cookie-cutter loans. Non-QM loans involve manual underwriting — but given that the refi business is down, originators are more willing to look at them,” Eshaghian said. So much so that at his company he’s expecting up to a 50% increase in Non-QM loan production in 2022.

BIG BELIEVERS

Acra Lending increased its sales force from 65 to 100 people, and they’re attending every conference of mortgage brokers to pitch Non-QM, said Lind, the company’s executive chairman and president, giving him confidence that the company’s Non-QM lending will increase more than 50% this year.

Arc Home Loans CEO Richard Bradfield said awareness is critical.

“People weren’t aware of this product,” he said. “It wasn’t mainstream, maybe because loan officers and companies weren’t comfortable with the product and then moved on to other [mortgage] applications.”

“It doesn’t mean there are more borrowers out there. It just means they haven’t been introduced to it yet,” Bradfield added.

DRIVING Other DEMAND prospective Non“Interest rates QM borrowers have gone up,” include high net Greenbox Loans worth individuals CEO Raymond who don’t always Eshaghian said show an annual succinctly. income the way Originators’ those who collect a “pipelines have W-2 tax form do. disappeared,” he These loans can said. “Non-QM also be for foreign isn’t [interest] buyers as well as – Argus research rate sensitive property investors. and so the “It’s fair to analyst Kevin Heal originator market say Non-QM is focusing more borrowers qualify and more on for the loan given Non-QM and, as a result, we’re seeing their cash flow but for one reason a spike in production.” or another may not qualify on paper The typical Non-QM borrower, has an for a conforming loan,” Greg Austin, interest rate that’s anywhere between Carrington Mortgage’s executive vice 75 basis points to one full percentage president, said. point higher than a conventional 30year fixed mortgage, sometimes more, SERVING THE SELF EMPLOYED Eshaghian noted. They apply for these Much of the optimism for Non-QM’s

“Non-QM lending will do what it’s done, 5% of the market. It’s not going to be 25% of the market,”

| NATIONAL MORTGAGE PROFESSIONAL MAGAZINE | APRIL 2022

Solutions’ Winokur confidence about NonQM’s potential this year — is from Upwork, a marketplace for freelancers.

It reported in December that 59 million Americans performed freelance work last year.

“Freelancers contributed $1.3 trillion to the U.S. economy in annual earnings, up $100 million The emergence of the Non-QM space from 2020,” is credited to the lack of the Agencies Upwork reported. ability to create loan programs for “The higher diverse homeowners, low-income and skilled nature underserved communities that may be of freelancing is realized in application. Natalie Verrette, clear as 51% of president & CEO, Champions Funding. post-grad workers chose freelancing, up 6% since potential stems from the number of self2020, while the share of freelancing employed workers. But like this year’s individuals with high school diplomas estimates for Non-QM lending, it’s or less education has declined 37% from difficult to pin down how many people 2020 to 31% in 2021.” are their own boss.

The advantage of the Non-QM For example, according to the U.S. loan, Natalie Verrette, president & Bureau of Labor Statistics, people CEO, Champions Funding says, is its calling themselves self-employed flexibility in determining a prospective increased to 9.2 million in 2021 from borrower’s annual income and how 8.8 million in 2019. That same report, much they can afford to borrow. Her however, showed that self-employed company cross references a borrower’s numbers dropped by 200,000 in current pay with what they were February, to just over 9 million. making prior to COVID-19.

Barron’s, meantime, reported in “The mitigation of risk is balanced March that “The Great Resignation” — across income analysis, a review of a term coined as people left their jobs in their credit and FICO score,” she said. droves in 2021 — was reversing itself, Lind agreed. “The average borrower with people returning to the office. is making a down payment of 34% “There are over 500,000 new, and has an average credit score of 730. unincorporated, self-employed They’re good borrowers,” he pointed workers,” said Deephaven Mortgage’s out. “They just don’t have access to Senior Vice President Shelly Griffin, credit like the standard W-2 employee.” citing a Wall Street Journal article from Eshaghian’s weighted average loan November as the reason her company amount is $600,000 and his borrowers sees growth in Non-QM loans. have a credit score of 730, he said. At The Pew Research Center estimated Interline, CEO Gene Thompson, III, there are 16 million self-employed said his average borrower is a high net workers, a number not seen since 2019. worth individual with a high credit But the study showing the greatest score who’s making a down payment number of self-employed workers — of at least 20% and taking out a and which gives Angel Oak Mortgage mortgage north of $700,000. n

PUSH, PUSH, PUSH

E

ducation and sales calls have been instrumental in gaining originator buy-in, say executives in the Non-QM field.

“There was a lack of knowledge and awareness, that was the problem,” Greenbox Loans CEO Raymond Eshaghian said. “The Realtors didn’t even know this product existed, so I got involved with a couple of Realtor groups to talk about non-QM lending, and that helped.”

The bootsRaymond Eshaghian, on-the-ground CEO, Greenbox Loans approach is similar to what Angel Oak Mortgage Solutions is doing. Its chief marketing officer, Steven Winokur, says the company’s 90 account executives make between 50 to 100 presentations a month to real estate agents about Non-QM loans because they view them as the gatekeeper to the prospective borrower.

“We offer an unbranded presentation that can be used to present non-QM to real estate agents,” he said. The brokers and loan officers can brand it with their own logo and contact information.”

The advantage of this presentation is that it allows loan officers to give something other than the same old, tired sales pitch about great rates and fast closes, Winokur says.

It allows them to say, “‘I’m going to talk with you about how you can put more money into your pocket and how you can serve borrowers who are underserved,’” he said.

“The next thing we bring up is who do self-employed borrowers hang out with? Other self-employed business owners. [Non-QM] is a good niche, and they [the real estate agents] can become known as the expert on self-employed borrowing,” Winokur added. n

NATIONAL MORTGAGE PROFESSIONAL MAGAZINE | APRIL 2022 |

37

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8

California Mortgage Expo IRVIN E , CA N MLS R EN EWA L CL A S S

Utah Mortgage Show PARK C ITY, UT N MLS R EN EWA L CL A S S

Suncoast Mortgage Expo TA M PA , F L N MLS R EN EWA L CL A S S

Motor City Mortgage Expo D E T RO IT, M I N MLS R EN EWA L CL A S S

AUG

19 AUG

19 SEP

1

SEP

8

Originator Connect L A S VEG A S , NV NM LS R E NEWA L C L A S S

Non-QM Summit L A S VEG A S , NV NM LS R E NEWA L C L A S S

Texas Mortgage Roundup DA LL A S , TX NM LS R E NEWA L C L A S S

Great Northwest Mortgage Expo SE AT TLE , WA NM LS R E NEWA L C L A S S

JUST ADDED

JUN

16 JUN

23 JUL

6

JUL

7

JUL

21 AUG

11

Texas Mortgage Roundup S A N A N TO N IO, TX N MLS R EN EWA L CL A S S

Great Northwest Mortgage Expo P O RT L AN D, O R N MLS R EN EWA L CL A S S

Mortgage Star N EW O RL E A N S , L A N MLS R EN EWA L CL A S S

Ultimate Mortgage Expo N EW O RL E A N S , L A N MLS R EN EWA L CL A S S

Arizona Mortgage Expo PH O E N IX , AZ N MLS R EN EWA L CL A S S

California Mortgage Expo S A N D IEG O, CA N MLS R EN EWA L CL A S S

SEP

13 OCT

11

OCT

18 NOV

8

DEC

13

California Mortgage Expo PA SA DE NA , CA NM LS R E NEWA L C L A S S

California Mortgage Expo OA K L A ND, CA NM LS R E NEWA L C L A S S

Colorado Mortgage Summit DE NVE R, CO NM LS R E NEWA L C L A S S

Texas Mortgage Roundup HO USTO N, TX NM LS R E NEWA L C L A S S

OCN Mortgage Holiday Party I RVI NE , CA

FACEBOOK THOUGHTS

Humor Me

NICK ROBERSON

Nick Roberson is a long-time mortgage industry veteran and a board member of the California Association of Mortgage Professionals. He’s a forthcoming and giving guy, who shares his … unique … perspective on work and life on his Facebook account.

Here are some of Nick’s FB thoughts this month:

42

J

ust got 30 minutes of cardio trying to pick up an ice cube Nick Roberson from the kitchen floor.

••• Sorry if any of you called last night and I didn’t answer.

Wonder Woman had me lashed to my bed with her Golden Lasso. I got even though … I hid her invisible plane … yeah that’s right … look who’s walking home! Bam! ••• I was speaking with a client earlier today. When I asked him how his wife was doing, he told me they were getting a divorce. I told him they always seemed so happy and asked him what happened. He said, well, last week was my birthday. My wife didn’t get me a present and didn’t even wish me a happy birthday. My parents forgot and so did my kids. I went to work and even my co-workers didn’t wish me a happy birthday. As I entered my office, my secretary said, “Happy birthday, boss!” That moment, I felt so special. She then asked me out for lunch. After lunch, she invited me to her apartment. We went there and she said, “Do you mind if I go into the bedroom for a minute?” “Okay,” I said. She came out 5 minutes later with a birthday cake, my wife, my parents, my kids, my friends, and my coworkers all yelling, “SURPRISE!!!” while I was waiting on the sofa … naked.

••• If you ever get locked out of your house, talk to your lock calmly. Because communication is key.

••• Although International Women’s Day is now passed, every day I am grateful for all of the wonderful inspirational women who have had, and continue to have a positive impact on my life. My grandmother taught me kindness, filled my heart with love, and my stomach with chocolate chip cookies. My mom taught me perseverance, love, faith, and the importance of hard work. My second-grade teacher Mrs. Gravendyke showed me the world is full of adventure, and that there is good in everyone, you just have to look for it. All of the amazing women in my industry who have been there for me throughout my career to educate and support me. I could go

| NATIONAL MORTGAGE PROFESSIONAL MAGAZINE | APRIL 2022

on and on. Frankly, there are too many others to mention here. My daughter continues to inspire me on a daily basis as she has shown amazing strength in the face of tragedy, knows nothing is impossible, and that a woman can be just as powerful as any man. Thank you to all of you who have had an impact on my life. I am forever grateful. Please never forget how important you are to those around you, that you are stronger than you think, and even a whisper can have a powerful impact on the world.

••• I’m not the type of person you should put on speakerphone.

••• An Uber passenger tapped the driver on the shoulder to ask him a question.

The driver screamed, lost control of the car, nearly hit a bus, went up on the sidewalk, and stopped inches from a store window.

For a second, everything was quiet in the car. Then the Uber driver said, “Look, man, don’t ever do that again. You scared the living daylights out of me!” The passenger apologized and said, “I didn’t realize a little tap would scare you so much.”

The Uber driver replied, “Sorry, it’s not really your fault.

Today is my first day driving for Uber — I’ve been driving a funeral van for the last 20 years.” n

To see more by Nick, just go to www.facebook.com/nickroberson.

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