ACC Mortgage thrives with non-QM lending

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Proud to be known as the “old man” of non-QM, Robert Senko has been through his share of downturns and has persevered. Amid a softened housing market, he’s certain of emerging stronger than ever once inflation is tamed

ROBERT SENKO doesn’t mind people thinking of him as the old man of non-QM – on the contrary, he relishes the title as if it were a badge of honor. “I’m still on the young side of the industry – I’m only 53,” he told Mortgage Professional America in a recent interview. Then, he points to his white beard to suggest longevity in having weathered past storms while navigating the current choppy, inflation-fanned waters. And he’s doing it all with an exclusive focus on non-QM, the specialty of ACC Mortgage Inc., of which he is president. “A lot of this turmoil is new,” he said, referring to others who have not faced industry challenges in the past. “But what’s old is new again,” he adds. “This is nothing unique. It’s about company governance, market conditions not adjusting quickly enough.”

ACC Mortgage Inc. delivers customized solutions that put borrowers in a better financial position quickly. For more than 23 years, ACC – short for All Credit Considered Mortgage Inc. – has been committed to bettering the community and the financial positions of its customers. That’s nearly a quarter-century of focused, philosophy-driven lending that has positioned ACC Mortgage as a leading private money company. ACC lends to residential and business customers in order to help them achieve their financial goals. In turn, ACC Mortgage loans bolster community economic growth by facilitating home ownership and job creation, and improving the financial position of its borrowers. For more information, visit accmortgage.com.

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ACC Mortgage at a glance

ACC Mortgage touts its “unique lending philosophy” that has been the foundation of its business for 23 years

“For ACC, we were founded as kind of a double entendre – All Credit Considered was really a non-QM philosophy. We didn’t just go after the cookie-cutter loans, and we were founded 23 years ago”

Robert Senko, ACC Mortgage

To Senko, the past is prologue. The names may have changed – non-QM used to be known as B&C lending back in the day – but the landscape is still familiar. “In a galaxy far, far away, 30 years ago, when I got into the industry, there was traditional Fannie, Freddie, FHA, of course, and then you had this whole classification of other loans,” he said. “We used to call them B&C lending then because your “A” lenders were Fannie and Freddie, as you would expect. And then you’d have B and C for people who didn’t quite fit this box, either because of credit or some event that couldn’t get them financing, but they were good folks.”

Such loans – “It was more equity-based lending,” Senko said – began being offered in abundance. As their popularity grew, such loans were offered by a plethora of firms – companies such as GE Capital, Ford, Option One, Cityscape. It was at the last company that Senko cut his teeth as “nothing more than an account executive of 24, 25 years old,” he recalled. “But I had a frontline view and saw some of that growth.” Senko noted that while at Cityscape, he would work under CEO Robert Grosser – known as the godfather of non-QM – who helmed the company from 1985 to 1997. Besides recalling the halcyon days of his youth in invoking those times, Senko does so to distinguish non-QM loans from subprime loans, to which the former have unfairly been

compared. Cast as antagonists in the tale of the Great Recession, subprime loans couldn’t be more different from non-QM – and the very definition of “subprime” is inaccurate, Senko said. “’Subprime’ is a lazy term,” he said. “It’s a federal banking definition. If a bank had a loan on the books, [a credit score of] 659 was considered subprime. The loans that were getting originated in the early 2000s were all [on] excellent credit – they were in the 720 range – but they didn’t show income. Borrowers lied about their loans. That’s not really subprime.” Robust regulation following the Great Recession via the Dodd-Frank Wall Street Reform and Consumer Protection Act now further safeguards non-QM loan products, Senko noted. A non-QM loan, or a non-qualified mortgage, is a type of mortgage loan allowing a borrower to qualify based on alternative criteria rather than the traditional income verification that is required for most loans. Bank statements or the use of assets as income are just two examples of what can be used to qualify for a non-QM loan. “It became very equity-driven,” he said. “Values had tipped up. People had money to buy homes, but because they had a short sale, a deed-in-lieu, they couldn’t buy it. Non-QM started filling the era,” he said, putting the timeline at around 2014. “The market started shifting and capital markets came back into that space. It was very equity-driven, and that’s still the case. With all the turmoil that’s happened recently, the fundamentals of the loans are still there – there’s great credit quality, lending standards that weren’t applied prior to Dodd-Frank.”

leadership in not anticipating the worst-case scenario. He took a different – and decidedly old-school – tack that continues to yield reward to this day: “You hope for the best and prepare for the worst,” he said. “I don’t think a lot of companies do that.” Which is not to say there won’t be difficult times ahead. “There are several forces at work to make the near term very challenging,” Senko said. “First, the cost of borrowing has increased, so the purchasing power for the consumer has been reduced. That means home prices must come down in order for borrowers to be qualified to buy the home.”

“You have peaks and valleys and [we are] coming off an incredible peak. Right now, we are going into a valley, but the optimist in me always believes I can improve during the downtime to prepare for the next peak”

Robert Senko, ACC Mortgage

What’s more, the volatility of the market lessens reliance on exchanges for quick cash, he noted. “The stock market has taken a hit, so folks can’t just sell stocks to afford the home,” he said. “Double whammy for the market. On a capital market basis, the folks who buy our paper are not willing to pay a premium until the Fed stops raising rates. The Fed has been very clear that they are raising rates to 4.5 percent and then they will be ‘neutral,’ meaning they do not plan to raise or cut rates.” That’s where Senko sees a return to some semblance of normalcy: “At that point, the market will be able to price our paper appropriately and firms should be able to make normal income on a per-loan basis. Inflation should be greatly reduced from [current] levels, and if the job market doesn’t get hurt too bad, consumers will be able to buy homes at a

reduced price in a higher rate environment. Barring any black swan event, assuming Congress becomes split, then the world and economy should operate on a normal basis.” Having weathered past storms, Senko is confident the ship ultimately will be righted once it emerges from choppy waters. “Although I operate from a very cautious perspective, fundamentally I am an optimist as well as a realist. You have peaks and valleys and [we are] coming off an incredible peak. Right now, we are going into a valley, but the optimist in me always believes I can improve during the downtime to prepare for the next peak.” He ended the conversation on a high note, expressing something of an upbeat slogan forged from past struggles long overcome: “See you back on top!”

By following these simple principles – superior service, a complete financial review, and bettering the financial position of the borrower and the community – ACC Mortgage has closed billions of dollars in loans that have provided tangible benefits to each of its clients

The lending philosophy at ACC Mortgage has four tenets: Benefit to borrower and community; capacity to repay; fair value; and continuation of employment

ACC Mortgage at a glance

Non-QM share of total mortgage counts doubled from its lowest level in 2020 to roughly 4% of the first-mortgage market during the first three months of 2022

To achieve a qualified mortgage, a borrower’s debt-to-income (DTI) ratio must be 43% or less

Loans must be originated by insured depositories with total assets less than $10 billion

Loans must be held in a portfolio for at least three years

Enter ACC Mortgage. “For ACC, we were founded as kind of a double entendre – All Credit Considered was really a non-QM philosophy,” Senko said. “We didn’t just go after the cookie-cutter loans, and we were founded 23 years ago.” The company’s continued growth illustrates its ability to navigate an uncertain landscape. One test of its mettle came at the peak of the pandemic. “Unlike a lot of my competitors who had a pure securitization outlet, we had a multipronged approach in that we worked with securitizors as well as portfolio balance sheet leaders for funding, and that allowed us to keep our legs during the early days of COVID when a lot of people didn’t or couldn’t. A lot of companies shuttered staffing, and we were able to grow. Coming out of COVID, we elevated through those times. The way we hedged and locked our loans, I wasn’t gambling with the markets.” Senko suspects many companies that failed during the pandemic neglected to pivot in preparation for downturns due to “ego-driven”

Source: CoreLogic

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