Sometimes borrowers may be turned down for a mortgage not because they can't afford it, but because they don't fit neatly into traditional lending boxes.
These borrowers represent a substantial opportunity for brokers and Loan Officers who are willing to familiarize themselves with non-QM products. However, serving these clients well begins with understanding who they are and how to engage in the right conversations with them.
For our recent Broker Buzz episode, Don Chiesa, Division Vice President at Newrez Wholesale, spoke with Sosimo Avila, Loan Officer at Wholesale Broker Partner West Capital Lending. Sosimo has become highly successful with non-QM lending.
Sosimo shared what he's learned about succeeding with these types of loans. He says mindset and relationship-building are just as critical as product knowledge.
Reframe How You Think About Non-QM Borrowers
The first key to success in non-QM is understanding who you're actually serving. Non-QM isn't necessarily an underserved market—it's simply overlooked, and this difference matters for how you position these products.
These borrowers can often perform on a mortgage, but they need more common-sense flexibility to get approved. They're frequently business owners with strong cash flow but not enough tax income history, investors building portfolios, or high-net-worth individuals with assets but non-traditional income streams.
Successful Loan Officers think of non-QM loans as “entrepreneur loans.” This reframing helps both borrowers and referral partners understand that these aren't alternative or subprime products.
Two years ago, Sosimo said, non-QM had a different reputation, and many Loan Officers avoided the space because of misconceptions about the products.
“It was a hard sell even though it was the right sell in many circumstances,” Sosimo said. “Now, it’s gone through a rebranding… these (loans) are the best financing for entrepreneur-type borrowers.”
Starting With the Right Conversation
Success in non-QM depends on how you communicate with these borrowers from day one. Non-QM loans often involve more documentation flexibility, which means you need to help clients understand the trade-offs between rate and convenience up front.
Some self-employed borrowers will opt for bank statements over tax returns to try and simplify the process, while others are willing to provide more paperwork for better pricing where applicable. For example, with Newrez’s SmartSelf product, borrowers can qualify using 12 or 24 months of bank statements, 1099s or profit-and-loss statements without needing to provide tax returns.
Others who have experienced a credit event might find our SmartEdge option valuable, as it accommodates borrowers who fall just outside standard agency programs but are otherwise financially stable.
Either way, managing these expectations from the start prevents frustration and positions you, the broker, as a trusted mortgage advisor. That trust is what drives referrals and repeat business in the non-QM space.
Build Strategic Referral Relationships
To build real volume in non-QM, you may need to expand beyond your existing referral base. CPAs and financial advisors often make good referral partners, Sosimo suggests, because they work with exactly the type of clients who need non-QM products: entrepreneurs, high-net-worth individuals and investors.
Financial advisors are trained on case studies, so product feature sheets won't resonate with them, in Sosimo’s experience. Instead, he suggests walking them through real-life scenarios showing how a bank statement loan preserves the client's investment portfolio instead of forcing them to liquidate assets for a down payment.
“These types of case studies and those types of conversations are going to open up this new world of speaking for you,” Sosimo said. “(It affects) how your leads are going to be referred over to you, if you show yourself to be a consultant who knows what they’re talking about.”
For real estate investors, you can demonstrate how they can expand their portfolios using property cash flow rather than personal income to qualify. This is exactly what SmartVest enables.
When you can solve problems for their clients without disrupting carefully crafted financial plans, you position yourself as a loan officer worth working with.
Choose the Right Wholesale Partner
Success in non-QM may also depend on choosing the right wholesale partner and building strong long-term relationships with them. This is why it’s a better idea to work closely with a few key partners rather than spreading yourself too thin trying to work with everyone. It allows you to truly understand their products, pricing and unique advantages, which makes you more effective when structuring deals.
Newrez Wholesale stays close to what's happening in the market to make sure they're delivering the right products for brokers.
Our Smart Series (including SmartSelf for self-employed borrowers, SmartVest for investors, and SmartEdge for those with unique credit situations) represents our commitment at Newrez to cover the most common non-QM scenarios brokers may encounter.
Plus, features like temporary buydowns give brokers tools to help clients in different rate environments.
Brokers working with Newrez can leverage their Account Executive's expertise when they need guidance. Those relationships matter when you're working through a unique scenario or need help structuring a deal.
Growing Your Non-QM Business
The non-QM space continues to grow as more borrowers realize they have options beyond traditional lending.
For brokers and Loan Officers, real success in this space comes down to reframing how you think about these borrowers, managing expectations to build trust, developing strategic partnerships with CPAs and financial advisors, and working closely with wholesale partners who can support you with the right products and expertise.
If you're already partnered with Newrez, reach out to your account executive to learn more about our Smart Series products and how we can support your non-QM business. If you're not with us yet, get in touch to see how Newrez might be able to help you grow.
Sosi Avila Jr.
Vice President, West Capital Lending
NMLS #1511489 AZ #1050060 AK #1511489 │ CA DRE #02222466
24 Executive Park, Suite 250, Irvine CA 92614
savila@westcapitallending.com
949-734-9403