Technology is one of the primary ways that forward-looking wholesale and retail lenders are addressing the supply/demand gap. Specialty lenders like Oaktree Funding and Finance of America are using our technology at the front end of their non-QM processes to help brokers and LOs quickly determine borrower eligibility.
On the wholesale side, brokers can access eligibility engines through many of the leading LOs directly in the broker portals where brokers submit loans to the wholesale lender. They can come in, run a quick scenario, get product eligibility and rate information, and then click a button to run the AUS, upload the file, reissue credit and get a findings report.
Meanwhile investors are increasingly using our non-QM calibrated AUS to accelerate decision making and improve underwriter productivity. Their goal is to offer the originator and underwriter the same experience that they have with DU and LPA on the agency side, with a custom AUS on the non-QM side. Meaning, they should be able to click a button, choose a program, and get a findings report detailing eligibility by each element of the program and product guidelines.
Prior to the big pause, lenders and investors had been growing more comfortable with non-QM products and the performance of their borrowers. This translated into higher loan to value ratios, less documentation and larger loan limits. One lender, for example, was even offering bank statement loans, based on a one-month bank statement.
While the industry is not ready to roll back things back quite that far, non-QM guideline changes are occurring on an almost daily basis. For example, three-month bank statement programs are once again available; LTVs and loan limits are rising, credit score minimums are back under 700 and debt service coverage ratios (DSCRs) are approximately .75.