Loan Product Innovation is Returning to the Market

After nearly a year, we’re finally beginning to see loan product innovation returning to the mortgage industry. Over the past few weeks, our sales team has had productive meetings with a number of lenders who are bringing a range of new loan products to market.

With the MBA and other experts predicting that agency purchase money lending will fall off this year and refinances are finally ready to dry up, these new products will keep the leading lenders growing.

Here’s what we’re seeing now:

Non-QM is back. When COVID struck, liquidity for non-agency loan products dried up quickly. It was impossible to know what the future would look like from under the shadow of an impending global pandemic, so ratings agencies and warehouse lenders pulled away from Non-QM.

Those days are over. With the vaccine rolling out, stimulus money continuing to flow to Americans and an improving economy, Non-QM lenders are finding strong demand for their products.

Since we work with wealth management firms, and credit unions who originate loans for their own portfolios, , we arguably have more experience in Non-QM loan origination than any other technology partner in the industry. We are enjoying our conversations with special purpose lenders looking to originate more of this business.

Small Balance Commercial. Whether it’s rehabbing a single family home or refinancing a rental portfolio, lenders are looking at small balance commercial lending as a way to grow their businesses. We expect to see more of this business as the vaccine rolls out and more small businesses sprout back up.

Fix & Flip. Word on the street was that these investors made less money in 2020 than they did the year before. While that’s true, they still made good money, bringing in about $66,000 per property, according to some sources. Making loans to these investors is the easiest way to get repeat business from the same borrower any lender could have.

Jumbo. With home values rising fast all across the country, the Jumbo business is stronger than ever and a good place for lenders to find growth as agency lending falls off. While there are some agency Jumbo loans, the majority of these deals are non-conforming, making them great opportunities for both lenders and their investors.

With mortgage interest rates certain to rise in the future, these loan products are great ways for lenders to maintain their momentum and the right technology makes them easy to originate. To find out how, reach out to schedule a discussion.

By Joe Camerieri, EVP, Client Account Management at Mortgage Cadence

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Media Contacts

Mortgage Cadence:
Megan Martin
EVP, Marketing
(516) 480-6765
megan.c.martin@mortgagecadence.com