Marc Halpern (pictured top), CEO of Foundation Mortgage in South Florida, said the wave of new wholesale lenders entering non-QM is not surprising. However, for some of those new companies, market education is coming faster than they expected.
“You’re seeing a lot of people come to market in wholesale,” Halpern told Mortgage Professional America. “I don’t know who these people are. And it’s not so easy. When you go to sell these loans to the takeout company, and you’re making your own delegated decisions — we have the years of experience. But what you’re going to see is that there’s going to be people coming in and going out as quickly as possible, because they don’t really know the rules of the road.”
What separates top lenders
Halpern said the evidence is already showing up in buyback data. He said he heard of one company dealing with 60 buybacks, a number that reflects underwriting decisions made without the experience the product requires.
He said the numbers will not work for lenders running those buyback rates.
“There’s not too many companies that can eat 60 loans, even if you’re breaking even on them,” he said. “The numbers aren’t going to work. And even if they’ve got an investor behind them, if you’re losing a couple million a month or a couple hundred thousand, it’s going to add up quick.”
