TheMReport — News and strategies for the evolving mortgage marketplace.
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18 | M R EP O RT COVER FEATURE more difficult adjustment for you to build your business when the refi boom ends." Another concern for the mort- gage lenders in the space is the potential for an increased level of competition. "We see it both from the lender side as well as the vendor side," added Evolve Mortgage's Paul Anselmo. "There are a lot of new guys coming on that kind of smell the opportunity if you will." "There are significant labor shortages in the underwriter category," said PCMA's John R. Lynch. "It's not like we're popping underwriters out of Stanford. These are seasoned credit underwriters, and with the increased compliance re- quirements and the amount of disciplines that the data puts on to them as a responsible party for making a credit decision, it re- duces their output to one-to-three files per day." But more competition going after non-QM borrowers also equals more competition to hire the talent needed to coordinate these loans. "At a time where you have a three-to-five times volume increase in a matter of four or five months, it puts a strain on underwriters," he said. "Not only from the standpoint of just needing more underwriters but in the amount of hours that these underwriters are working at some point. It's going to take a toll on them personally and profession- ally, and it takes a toll on the business, as well. What used to take 20 days or 25 days to get a loan done can now take 50 days." Lynch added that non-QM lenders working with a shortage of underwriters could be in for some pain. "At a time where you have a three-to-five times volume increase in a matter of four or five months, it really puts a strain on underwriters," he said. "Not only from the standpoint of just needing more underwriters, but in the amount of hours that these underwriters are working at some point. It's going to take a toll on them personally and profession- ally, and it takes a toll on the business, as well. What used to take 20 days or 25 days to get a loan done is now averaging 50 days or more." Lynch added that non-QM lenders need to focus on decoupling credit responsi- bilities and lead oriented process improvements to overcome the shortage of underwriters. However, the long hours and hard work that underwriters put into non-QM loans today appear to be paying off for the industry. "The quality of the busi- ness is going up," said Pacific Mortgage Capital's William Aubrey. "Historically speaking, the performance of the non-QM business that we specialize in has been very, very good, and I suspect it's going to even be better with the tightening of the underwriting requirements. The reserve requirements are more stringent, the debt-to-income ratio requirement is more stringent, and the credit is more stringent, and the performance of the paper is going to continue to be very, very good." . PHIL HALL is a former United Nations-based reporter for Fairchild Broadcast News, the author of nine books, the host of the award- winning SoundCloud podcast "The Online Movie Show," co-host of the award-winning WAPJ-FM talk show "Nutmeg Chatter" and a writer with credits in The New York Times, New York Daily News, Hartford Courant, Wired, The Hill's Congress Blog, and Profit Confidential. His real estate finance writing has been published in the ABA Banking Journal, Secondary Marketing Executive, Servicing Management, MortgageOrb, Progress in Lending, National Mortgage Professional, Mortgage Professional America, Canadian Mortgage Professional, Mortgage Professional News, Mortgage Broker News, and HousingWire. "There are a lot of borrowers out there who have not been able to obtain traditional lending, maybe because they're self-employed or they're seasonal workers. Maybe they had trouble making a consistent payment history because they've been affected by COVID." —Janina Woods, SVP, Planet Management Group