Abstract: Having had taken the brunt of the blame for the ’08-’09 real estate recession, lenders offering loans that did not meet GSE guidelines had begun to regain popularity in recent years. Then they vanished overnight. Leaving borrowers left holding the bag.
In what seemed like a disappearance act, Non-Qualified Mortgage Lenders (Non-QM) quickly exited the lending marketplace. These lenders had begun to rebuild a significant presence in recent years by offering such loans as;
– Bank Statement Loans
– Assest Depletion Loans
– No Income Investment Loans
– Interest Only Home Loans
These loans offer greater flexibility and are popular amongst independent contractors, investors & retirees. Though because they do not fit within CFPB guidelines they aren’t eligible for insurance, purchase or guarantee by GSE’s such as Fannie-Mae or Freddie-Mac. Leaving them only to be sold privately. When the Covid-19 Pandemic threw the world’s financial markets into a tailspin last month, non-QM lenders hit the pause button as their investors panicked. Approved loans went unfunded and buyers in contract were left fearing the loss of their deposit or even worse, legal action.
