Is the non-QM market healthy or not?

Fisher pointed out the recent upheaval in the market as some lenders exit the non-QM space.

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“You also see some of the lenders that were really just agency lenders that try to get in non-QM maybe shuttering a retail division or shuttering a wholesale division, but still staying around in their present form,” he said. “So, I think that’s normal in certain business cycles because overall, non-QM has been pretty solid. I mean, you’ve had to know what to do with your loans before you even fund them, whether you have them pre-sold or some type of agreement to hedge yourself against the volatility in the market. But those of us who have and continue to are doing just fine.”

Harvey agreed. “I think non-QM is strong. The demand is there. There’s healthy competition. There are lots of borrowers that need to qualify unconventionally, that don’t qualify in the normal standards of the government agency paper. So, we have products for them, and we’re seeing an uptick in volume over the last three months. Even with the rates where they’re at and affordability, these borrowers still need this paper. I mean, you wouldn’t have non-QM without QM.”

If you look at the overall origination market, Davis added, production has plummeted by over 40% year over year.