Angel Oak sees record quarter as non-QM heats up

by Ryan Smith10 Jul 2018

As the non-QM space continues to heat up, Angel Oak Mortgage Solutions is seeing record numbers and expanding by leaps and bounds.

“We just finished a record-setting second quarter,” said Tom Hutchens, executive vice president of production for Angel Oak Mortgage Solutions. Hutchens said that across all of Angel Oak, the company posted a record $512 million in non-QM loan volume during the quarter. Angel Oak Mortgage Solutions’ origination volume also grew 114% year over year in Q2.

The extra activity has also meant an increase in workforce, Hutchens said. 

“In the second quarter we opened a new ops center in Dallas,” he said. “After 60 days, we completely filled that operations center and are going to have to expand it to keep up with our growth. We’ve added salespeople, we’ve added operations people, and we’re setting records every month.”

Hutchens said that the company is seeing an explosion in interest in non-QM loan products in both the wholesale and correspondent channels. In large part, that’s because traditional mortgages have been getting more expensive.

“Probably the biggest factor is that with Fannie Mae rates going up, refinances are down significantly,” he said.” People are really paying attention to non-QM, and they’re also seeing it as a way to grow their business in this market. So the interest level is at an all-time high as well. Lots of people want to get into the non-QM space, and most people who want to do that think of us at the top of their list.”

And while interest in non-QM is nothing new, Hutchens said that now, more mortgage pros are actually taking the plunge and offering non-QM products.

“There’s no one who’s not thinking about it,” he said. “The biggest change between this year and years past is that people are getting in. It’s time to stop thinking about it. It’s not too late; we’re still in the early stages of the cycle, so it’s not a situation where people have missed their opportunity. But now is absolutely the time.”

Hutchens said that mortgage originators who are interested in entering the non-QM space should find an experienced lender partner.

“Get in with someone who has a proven track record,” he said. “There are a number of wholesale non-QM lenders that seem to be popping up on a regular basis, but they haven’t been doing this for five years like Angel Oak has. You should do this with a proven, reliable partner – because if you get in with someone who’s still new at it, you’re putting your business at risk.”

Unlike many lenders who’ve only lately joined the party, Hutchens said, Angel Oak Mortgage Solutions has non-QM embedded in its DNA.

“I think what sets us apart in the industry is that we do non-QM exclusively; it’s all we do. And it’s all we’ve been doing for five years,” he said. “Plus, we manage the other parts of the overall process through other Angel Oak Companies. For example, within Angel Oak, we go from origination to securitization. So we’re responsible for the whole process.”

And while some originators might still be gun-shy about non-QM loans, Hutchens said that the products’ record speaks for itself.

“At the end of the day, the performance of these loans has been outstanding,” he said. “So anybody who is concerned about non-QM – now there’s a long enough track record and performance statistics available … the proof is in the actual performance of the loans.”

“It’s time for people to participate in the space,” Hutchens said. “The time for waiting is done.”


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