A number of firms are working to increase originations of non-QMs and ramping up investments in the loans. It can be a highly profitable business, though investor demand is volatile.

As an increase in interest rates curtailed its GSE refi volume, Impac is rushing to ramp up originations of non-QMs. The firm also plans to issue its own MBS.

Some 15.5% of applications for jumbo mortgages in 2020 were denied by lenders. Among individual funders, denial rates ranged from a low of 1% to north of 50%. (Includes data chart.)

Business-purpose lender Velocity Financial increased loan production in the first quarter of 2021 but income declined. The firm, which sold fewer loans in the first quarter, issued an MBS in May.

In the absence of the GSE patch, lenders have fewer incentives to rely on GSE eligibility when determining a loan’s QM status. Still, the final destination of a loan will depend on pricing in the non-agency market.

At least until October 2022, jumbo lenders can use either the long-standing qualified mortgage standards or the new, more flexible standards.

Guaranteed Rate sold $5.55 billion of jumbo mortgages to unaffiliated buyers in 2020, nearly three times the volume of second-ranked Quicken Loans. (Includes two data charts.)

Redwood Trust nearly doubled its net income in the first quarter, helped by the quick aggregation and sale of jumbo mortgages.

The real estate investment trust also plans to acquire business-purpose loan originator Lima One.

Goldman Sachs Mortgage Company has acquired more than $800 million of non-QMs this year and is set to issue a $291 million MBS.