Finding the way to a non-QM lending solution
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Leading non-QM lender looks “at the big picture” when structuring non-QM lending solutions
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MOST LENDERS agree that the drive toward refinancing has switched gears from overdrive to neutral over the last few months as Federal Reserve lending rates have edged northward. The demand for traditional Fannie Mae and Freddie Mac agency-based mortgages has also taken a detour.
Although the US housing market performed exceedingly well over the course of the pandemic, the road to mortgage demand has been supported by historically low borrowing rates.
With the recent increase in mortgage rates affecting both floating and fixed mortgage loans, the number of applications has taken a sharp downward turn. Mortgage rate hikes have also played out against the backdrop of the big banks’ decision to clamp down progressively on borrowing parameters.
At Sprout Mortgage, we’re driven to provide uncommonly good mortgage solutions for homeowners, real estate investors, and mortgage professionals. One of the nation's largest non-QM originators and fastest-growing independent lenders, we offer a set of loan programs with flexible qualifications, sensible underwriting, and aggressive pricing. Our technology helps our professional clients grow their businesses faster. iQualifi helps brokers identify in seconds the best loan, terms, and pricing solution for any scenario. iAnalyze provides an automated calculation of qualifying income that can be used to submit a loan application. These and more are all part of our industry-leading BROKER AdvantEDGE program.
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“I pride myself on finding a way. My niche is striving to figure out how to make a deal work to completely meet my customers’ needs”
Joe Mundo,
Sprout Mortgage
Rather than reversing course, some of the lending traffic has turned toward non-QM lending options.
For Joe Mundo, account executive at Sprout Mortgage, a leading lender with years of experience providing innovative non-QM solutions to mortgage brokers, the non-QM space has been a viable lending option for quite some time for borrowers who may not fit into the narrow lending model offered by the big banks.
“When conforming lenders are not able to qualify as many consumers, I frequently get deals that were turned down for various reasons,” Mundo states.
“I pride myself on finding a way. My niche is striving to figure out how to make a deal work to completely meet my customers’ needs.”
To help mortgage broker clients find creative lending solutions for their borrowers, Mundo says that he “just digs in and figures out a way.”
By approaching clients in a straightforward and no-nonsense manner, Mundo can also determine quickly whether the file may have a solution.
With a philosophy that focuses on finding a lending solution where others fall short, Sprout Mortgage has earned its spot among the elite of non-QM US lenders.
The route to non-QM options
Sprout Mortgage stands out from the competition, Mundo highlights, through its ability to offer an impressive array of lending options with flexible terms that reliably attract substantial broker interest, and by its continuous expansion of loan programs to do so.
Cognizant of the economic strains for many during the drawn-out pandemic, Sprout Mortgage can even provide lending solutions for those borrowers who suffered salary losses or interruptions.
“We have two programs that require one year’s worth of income to qualify – a 12-month bank statement program and a full doc program that qualifies borrowers on a one-year total,” Mundo explains.
“This has helped a lot of people get loans who wouldn't [otherwise] have been able to, specifically small businesses.”
“One perception that I think is interesting stems from people who don’t do a lot of non-QM. They think it means bad credit. But it doesn’t”
Joe Mundo,
Sprout Mortgage
The route to technological streamlining
Providing the roadmap to seamless and efficient processing times, pricing, and ease of loan origination, Mundo points to Sprout Mortgage’s “Broker Advantage” platform.
“We have a great product called iQualifi, our program and pricing tool, which I use daily and have taught my brokers to use. Not only is it easy to use, but it’s also fast. It takes half a minute to a minute to get your pricing, and it tells you the exact programs and parameters that customers will qualify for,” Mundo says.
“You can do anything, from changing the loan program to the terms. iQualifi provides lender-paid options in an instant.”
Introduced on November 20, 2018, iQualifi represents one of several technology platforms that Sprout Mortgage offers its brokers. iAnalyze is of equal significance for brokers in helping with the overall efficiency of the loan process.
“We launched iAnalyze in January and it is a game-changer for sure,” Mundo says.
“It is an Artificial Intelligence [AI] analysis of bank statements. So instead of having to take the full day, iAnalyze provides income from bank statements in about 30 minutes.
“iAnalyze is extremely accurate.”
The route forward
For Sprout Mortgage, focusing on continued technology improvements is key.
“It’s all about making our submission and qualification process more streamlined, including bank statement analysis. We have implemented BROKER AdvantEDGE to give our brokers the tools they need to gain the advantage over their competition,” Mundo says.
Turning the spotlight on the speed of submission and efficiency when dealing with its broker clients, Sprout Mortgage is looking ahead to a lending route that is progressively opening up to non-QM options.
“We go above and beyond to get it done,” Mundo concludes.
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Decrease in refinance market share
down to 38.8% from 51% in April 2021
Year-over-year decrease in volume of mortgage applications
41%
Week-over-week decrease in volume of mortgage applications
6.3%
US Mortgage volume and refinancing numbers for April 2022
Week-over-week decrease in volume of refinancing
10%
Year-over-year decrease in volume of refinancing
62%
Source: Mortgage Bankers Association
US jobs outlook – jobs added per sector, March 2022
Leisure and hospitality sector
112,000
Source: US Bureau of Labor Statistics
Retail
49,000
Professional and business services
102,000
Manufacturing
38,000
Social service sector
25,000
Mundo has also been able to generate a considerable amount of cold-lead interest in Sprout Mortgage’s non-QM lending solutions.
“I have been able to introduce viable non-QM loan solutions over the last year and a half to those who’ve never done one before. Many brokers state that non-QM is not a part of their business. Through my persistence and follow-up, many brokers present a loan scenario that fits into a non-QM mortgage solution,” Mundo says.
The reluctance of some brokers to consider non-QM borrowing options for their clients stems from lingering misconceptions that still prevail.
“One perception that I think is interesting comes from people who don’t do a lot of non-QM. They think it means bad credit. They hold the view that it represents the old sub-prime days, when it really is not,” Mundo points out.
“Our average non-QM credit score is a 740.”