United Wholesale Mortgage (UWM), the nation’s largest wholesale lender, announced on Wednesday it will accept personal or business bank statements in self-employed borrowers’ loan applications.
The step comes as rising interest rates slow the flood of refinances, reduce lenders’ origination volume, and companies prepare to boost their non-qualified mortgage (non-QM) products.
According to UWM, only self-employed borrowers will be able to send bank statements to qualify for a loan, instead of income documents or tax transcripts. The product is available for loans up to $3 million and up to 90% loan to value. No mortgage insurance will be required.
The company said in a statement that the product “will give independent mortgage brokers another competitive edge when it comes to working with non-W2 borrowers.”
UWM also announced it is extending its no-cost appraisals for primary purchases until the end of April. In January, the company announced a credit up to $600 for borrowers appraisal costs for the next two months.
The non-QM sector is expected to take off in a higher interest rate landscape, when lenders are looking to reach borrowers outside Fannie Mae and Freddie Mac‘s credit boxes.
Agency rates are on the rise and refinance volume is down. Originators who had their best year in 2021 will have to utilize something else to make up for this loss in 2022 and non-QM can be the answer.
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Self-employed borrowers and those who work in the gig economy need homes. But current government-sponsored enterprise guidelines make it difficult for these borrowers who don’t have a traditional salary to qualify for agency-backed loans.
“We are going to see an increase in some of the non-QM lending. I don’t think it’ll ever be a significant chunk. But you need to be able to serve all of these customers,” Bob Broeksmit, Mortgage Bankers Association’s president and CEO, said on Wednesday morning during the ICE Experience Conference in Las Vegas.
Some lenders, however, are closely eyeing regulatory changes that could dampen the non-QM market by expanding the pool of loans able to get QM status.
The Consumer Financial Protection Bureau‘s new General QM Final Rule replaced the 43% debt-to-income ratio limit in favor of more flexible pricing guidelines, allowed jumbo loans to get QM status and provided additional ways to verify income or assets. The new rule is slated to be implemented on Oct. 1, 2022.
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