Contrary to Headlines, Non-QM Is the Real Thing

Part of our mission at Angel Oak Mortgage Solutions is to educate. For more than five years, we have strongly explained why today’s non-QM products are not the sub-prime loans of days past.

High-risk, sub-prime mortgages are dead and have been for more than 10 years. Today, borrowers must prove their ability to repay, according to Dodd-Frank rules. Therefore, new, stringent underwriting ensures that we are lending safely. The result: Non-QM loans have lower default rates than agency loans. Yet, alarmist news reports perpetuate the stigmas of bygone sub-prime products, unfairly associating them with today’s non-QM loans.

Just Google the term “Sub-Prime Is Back.” You will find dozens of articles, all written recently, warning about the risks of the “Revival of Sub-Prime.” Mainly, that is code for non-QM mortgages. It’s a shame, because Googling “Growth of Non-QM” delivers even more articles with positive coverage of non-QM.