Non-QM lending on slower pace to recovery

Non-conventional private label lending activity, or non-qualified mortgages (non-QM) that were among the first casualties of Covid-19, may be on a slower road to recovery than agency lending. According to industry experts speaking at “The Mortgage Industry’s Response to COVID-19,” one of NEXT’s “Virtual Lunch with an Expert” webinars featuring David Stevens and Planet Home Lending COO and NEXT alumna, Suzy Lindblom.

Non-QM will come back “because it is needed,” said Lindblom, noting that she has been in conversations with a couple of non-QM lenders who told her they already have, once again started lending in the nonconventional space.

While some other lenders are concerned non-QM probably will re-trench for too long, shut down some lenders or even the entire lending segment, Lindblom thinks non-QM “will come back, but not at the level it was at” before the Covid-19 outbreak.

What lenders should expect as the country reopens is a paced recovery in this space, said Stevens, an industry icon with more than 35 years of real estate finance, mortgage banking and public policy expertise, who currently serves on several advisory boards and as Chief Executive Officer of Mountain Lake Consulting.

Some of the non-QM products will be back, he said. “I can assure you,” that some of these companies, the likes of direct lender Redwood Mortgage, are sitting on the sidelines waiting to get back in, but “it may have gotten a bit difficult because there’s no liquidity in the non-QM space. But it will come back.”

Stevens says non-QM will come out of the crisis following a practical order. “First we are going to see the recovery of non-agency jumbos, because banks are going to be looking for margin on their portfolios.” It is possible to get 400 basis points on such loans, compared to practically zero bps, on agency loans, he said.

Deposit rates are extraordinary low, he added, “and that’s a great margin,” so if lenders can get that kind of credit quality during the recovery, it is going to be an interesting asset to have. Yet his market will not “come back steady,” he said.

Lisa Schreiber, Senior Vice President, of business optimization at NewRez LLC, also expects Non-QM lending will return gradually, probably in the next six to 18 months.

“Have had good performance and returns, probably not in correspondent for quite a while due to warehouse concerns,” Schreiber said. However, last week, United Wholesale Mortgage, one of the nation’s largest wholesale lenders announced, “they are going back to AUS results and relaxing overlays added in last 45 days.”

Whether non-QM will come back in a significant way, will depend on what happens over next winter, Stevens said, because there still are many unknown variables including the answers to many key questions. Will the virus come back? How will the unemployment rate change as a result? For how long are we going to work from home? Is the U.S. going to get another economic blow?

Those answers relate to private equity, private liquidity, default risk, counter-party risk, and other factors that affect the non-QM market and “are going through a much greater severity than what is going on in the agency space,” Stevens said.



Gateway First expands, hires eight experienced bankers

Gateway First Bank headquartered in Jenks, Oklahoma, added eight experienced professionals to banking teams in the Tulsa area and markets around Dallas, Texas. The new hires, which are part of the bank’s ongoing expansion, bring expertise working in financial institutions, private wealth management, private banking, commercial banking, commercial lending and treasury management.

Gateway transformed into a full-service bank in 2019, said Scott Gesell, CEO of Gateway First Bank. “We are excited to announce these individuals, who bring extensive experience” as the company expands its services. The $1.7 billion asset bank currently has more than 1,300 employees and operates six bank branches in Oklahoma alongside 150 mortgage centers in 40 states. 

In Tulsa, Oklahoma

Ann Darnaby, named Senior Vice President and Director of Treasury Management, is a senior treasury professional who brings proven leadership and a deep understanding of the elements of banking and cash management.

Todd R. Ward, Senior Vice President of Commercial Lending is responsible for creating and maintaining relationships with the bank’s commercial clients. He is a 25-year banking veteran with experience in financial analysis and customer relations.

Ashley Toma, Senior Private Banker, will manage portfolios and connect business owners, executives and others to the full range of products and services offered by Gateway and contribute her extensive private banking and wealth management expertise to developing client customized strategies, solutions and guidance.

Casey R. Beeman, Vice President and Private Banker, will work on complex accounts to develop and expand client relationships using his 16 years of expertise in both asset and capital management.

In Dallas, Texas

Joell Maddox, Senior Vice President and Director of Treasury Services, brings more than 30 years of mortgage lending and correspondent banking experience. He is responsible for sales and relationships with financial institutions, title companies and commercial customers who use Treasury Management Services.

Greg Hargis, Senior Vice President of Financial Institutions will focus on acquisitions and managing existing relationships. Hargis has 30 years of banking experience with specific expertise in financial institution lending, credit analysis & underwriting, risk management, capital markets, treasury management.

Dan Killian, Senior Vice President of Commercial Lending, has experience in relationship and division management, marketing and prospecting, portfolio and risk management, and credit risk approval.

Nicholas Ripollone, Private Banking Executive, brings more than four decades of banking experience, which include 25 years in high net worth client lending.

Regions Foundation adds $260K to CDFI grants fund

Alabama-based, Regions Foundation, a nonprofit run by Regions Bank pledged to support ten community development financial institutions (CDFIs) that are assisting small businesses impacted by Covid-19 in managing the crisis and preparing for the recovery phase.

In addition, the Foundation is funding Birmingham Strong, and set aside up to $500,000 to match donations by Regions Bank associates to United Way organizations and pre-approved community foundations responding to COVID-19.

These grants are part of a collective $5 million committed by the Regions Foundation and the $133 billion asset, Regions Bank for relief to consumer and small business in underserved communities. “Every day, nonprofits and community organizations are connecting with small-business owners” to provide customized guidance and financial assistance, said Marta Self, Executive Director of the Regions Foundation. “These grants will help this important work continue.”

The investments amount varies by CDFI size. These grants follow 11 grants announced on April 30 for community organizations helping businesses across the South and Midwest, and funding for six additional CDFIs on April 24.

The beneficiaries include Justine PETERSEN/Great Rivers Community Capital based in St. Louis, which provides essential financial services to entrepreneurs, as well as consumers and homeowners. Business and Community Lenders (BCL) of Texas, provides lending, entrepreneurship, and community development programs, same as the rest of the recipients.

Separately, the bank is funding local food banks using diverted funds. Advertising money originally purchased by Regions to promote bank services went to food banks to encourage viewers and readers to support their outreach. Regions also continues to offer customers financial assistance including mortgage forbearance.

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