Execs urge brokers to access a wider range of loan products
The continued surge of the non-QM loan space was one of the biggest mortgage stories of 2025 and will likely continue to be in 2026.
Non-QM lenders continue to gain market share in the non-bank lending space. Even as Fed governor Michelle Bowman made headlines last week with her desire for rule changes to get banks more involved in mortgage lending and servicing again, it’s unlikely to dent non-bank lending too much.
Yet many non-QM lenders who work with mortgage brokers are surprised when they hear that brokers are unaware of the product offerings available or refuse to work in the non-QM space. Two non-QM lender executives said brokers who avoid the space are leaving deals on the table.
John Brumund (pictured top left), senior vice president, and Peter Pavlakos (pictured top right), vice president at Quontic Bank, said they’re still shocked when a broker doesn’t realize all the tools that a non-QM lender has available.
“I would say that a lot of mortgage brokers don't truly understand the non-QM space,” Brumund told Mortgage Professional America. “If they took the time to educate themselves on the options that are out there in the non-QM space, it'll save them a lot of loans. I go out in the field and visit with brokers all the time, including with one yesterday, and he just didn't really understand it. There are so many loans that you're probably losing because you don't understand this product.”
Understanding the products
Brumund said it’s important for brokers to understand what non-QM is today, and what it isn’t. The idea that non-agency loans are subprime or questionable is a mistake.
“The biggest takeaway is just really educate yourself as a broker on the options that are out there,” Brumund said. “I've been doing this for a long time. Non-QM is fairly new in the space for a lot of people, and a lot of people just don't understand it. There are some nuances that are different, but there are loans that we can do that an agency loan couldn't do. They could save a lot of the loans that they might be walking away from if they were educated more on what's out there.”
Pavlakos said that non-QM loans are more than just bank statement loans, and understanding the full suite of what’s available can save deals for brokers.
“Non-QM was synonymous with the bank statement loan,” Pavlakos told Mortgage Professional America. “It's not just bank statement loans out there. You’ll see brokers try to put the same square peg in the wrong hole, so to speak. They got denied because one month they didn't show enough deposits. They take it over to this other lender, send them the same stuff, and get denied because a lot of people are using the same software to calculate it.”
Some products, like jumbo loans, are offered by traditional bank lenders. Brumund said that getting those products from a bank, compared to a non-QM lender, can be a bit more difficult.
“This just gives them a way to go out to their referral partners and to their clients and say, ‘There are options out here for your clients,’ especially on the higher loan amounts,” Brumund said. “With jumbo loans, the banks are very strict on those products. And a lot of those borrowers are not paid traditionally, and so our products come into play.”
Eye-opening experience
Brumund said it’s always interesting when he shares an alternative product with a broker, and they immediately see the benefit.
“I was with a broker yesterday,” Brumund said. “He didn't really understand what an asset utilization or depletion was, and I showed him, and he said, ‘I can save so many loans with that. I didn't even know that that was a thing.’ Just little things like that.”
Pavlakos had a similar experience with a broker trying to get a borrower qualified for a bank statement loan.
“I've seen a scenario where you watch the light bulb go off in their head,” Pavlakos said. “They were trying for a bank statement, and again, it was like some kind of shortfall, and they couldn't get enough of the income to qualify for the loan. And then he blurts out, ‘You know, this person has enough to buy the house outright. He has a million or so dollars in the bank.’
“And I'm like, ‘Why are you trying to do it as a bank statement program? Why don't you use the asset utilization?’ Take your assets, and different assets are treated by different percentages. Let’s say we had a million dollars in an investment account. You take 90% of that, divide by 60 months, and that's your qualifying income. You just see it blow his mind.”
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