“Being able to manage complex loans has long been one of our core strengths. With margins tightening in the current market, one that is highly commoditized, it makes sense for us to best serve our correspondent partners by focusing our energies on building our non-QM business.”
Carrington’s correspondent channel will now underwrite and purchase only non-QM loans, a product category that has gained momentum as traditional borrowers become harder to qualify and agency loan volume slows.
“In recent years, one of the most successful loan products offered by CMS has been the non-QM, or non-agency, loan,” Samuel Bjelac, senior vice president of third party originations for CMS, said in a Press release. “As the non-QM market continues to grow, we have been positioning ourselves, with expanded guidelines and competitive pricing, to capture more market share and add liquidity to the secondary marketplace.”
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Non-QM loans are often associated with borrowers who fall outside the traditional credit box – self-employed clients, gig economy workers, or those with more complex financial profiles. While these loans don’t meet government or GSE guidelines, they must still comply with Ability-to-Repay (ATR) rules put in place in 2014, and Carrington says it applies prudent underwriting standards across the board.