Non-QM lender Angel Oak Mortgage Solutions cuts 20% of staff

Non-QM specialist Angel Oak Mortgage Solutions is the latest player in the space to cut a sizable chunk of its workforce amidst widespread market volatility.

The company issued pink slips to 75 employees last week, about 20% of its workforce, citing the “current economic environment that has challenged the entire mortgage market.” 

“The reduction was done to ensure that the company maintains the proper staffing level required to meet current and anticipated non-QM demand,” a spokesperson for the Atlanta-based lender said. 

Non-QM loans aren’t government-backed and aren’t eligible for purchase by Freddie Mac or Fannie Mae. As a result, they present a greater risk and typically come with higher interest rates. The pool of non-QM borrowers includes real estate investors, property flippers, foreign nationals, business owners, gig workers and the self-employed, as well as a smaller group of homebuyers facing credit challenges, such as past bankruptcies.

Angel Oak Mortgage Solutions is the among the largest nonbank originators of non-QM and specialized mortgage solutions in the country, working through brokers and correspondents. Angel Oak Solutions originated $101.6 million in volume over the last 12 months, with a monthly average of $7.8 million, according to mortgage tech platform Modex.

(Angel Oak Home Loans LLC – a full-service mortgage lender with its own LOs, and part of the Angel Oak family of companies – originated $2.44 billion in mortgages over the last year, per Modex data.)

How will non-QM perform for the rest of 2022?

With inflation and rising rates, non-QM lending has spent the last few months in choppy waters, with some lenders closing their doors. However, the outlook for non-QM for the rest of 2022 is relatively optimistic, according to Acra Lending CEO Keith Lind.

Presented by: Acra Lending

Angel Oak Companies, through its mortgage-backed securities conduit Angel Mortgage Trust, launched a total of six non-QM private-label securities (PLS) offerings involving about 5,000 loans valued at $2.5 billion as of mid-September.

As rates rise, lenders are struggling to sell in the secondary market as investors are seeking higher yields. This liquidity problem caused non-QM lenders including First Guaranty Mortgage Corporation and Sprout Mortgage to abruptly shut down

Multiple lenders – including loanDepot, Guaranteed Rate via Stearns, AmeriSave, Mountain West Financial, Point Mortgage Corp. – have also exited the wholesale channel in recent months to focus on other channels.

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