Lind says Acra and other non-QM lenders are positioned well to tap into that demand and the secondary market created in its wake. He said Acra did one small non-QM loan securitization this year, valued at about $51 million, but next year he said the company is primed to do more deals and is “exploring [its] options in the securitization market.”
Non-QM mortgages also go to a slice of borrowers facing credit challenges — such as a recent bankruptcy or slightly out-of-bounds credit scores. The loans may include interest-only, 40-year terms or other creative financing features often designed to lower monthly payments on the front-end of the mortgage — often with an eye toward refinancing or selling the property in the short-term future.
It’s important to note, however, that non-QM (or non-prime) mortgages are not the same as subprime loans, which were the high-risk, poorly underwritten — often involving minimal or no documentation — mortgages that helped spark the housing-market crash some 15 years ago. Today’s non-QM/non-prime loans are underwritten to much higher credit, income and asset standards and involve a range of buyers beyond individuals with credit dings — and even those loans must meet federal Ability to Repay rules. The pool of nonprime borrowers also includes real estate investors, property flippers, foreign nationals and business owners.