Varnell also spoke about the resurgence of non-QM lending, which appears to be back in favor among originators following a drop off in 2020.
For borrowers who don’t fit the profile for conforming or government loans – and that means self-employed people with small businesses, as well as self-employed contractors and gig economy workers who make up almost 48% of the private sector – non-QM is the most likely answer.
According to recent data from the US government census, new businesses have mushroomed over the last 18 months, and in 2020 there were 4.35 million new applications, representing a 24.19% increase compared to 2019 – the biggest rise in a decade.
If the trend continues, non-QM products will be the beneficiaries. With some companies reporting record volumes this year, some sources predict non-QM volume levels to double in 2022.
Varnell said: “Non-QM is becoming more and more popular. A broker can run scenarios for QM as well as non-QM, but non-QM has grown – I would say it’s probably 50% or more of our platform today. Six months ago, it was less than 8%.”