Warehouse credit flows downhill: from the financier to the nonbank lender to the consumer. But with the pandemic stoking new economic fears, some providers are tightening their standards, like market leaders JPM and FH.
According to independent mortgage bankers, aggregators are adding credit overlays and refusing to buy loans in response to post-closing forbearance risk.
The mortgage market remained unsettled as the coronavirus damaged the U.S. economy and lenders weighed their options. The Fed came to the rescue with liquidity measures but fears regarding nonbanks persist.
The bulk of lenders operating in the non-QM market have suspended production due to a lack of demand in the secondary market. There are some signs that originations could resume within weeks.