A qualified mortgage is a type of financing that meets the lending standards of government entities. In recent years, there has been a growing amount of mortgage options that include loans that go beyond these standards. This type of financing is known as non qualified mortgages. A non qualified mortgage has a considerable impact on both homeowners who seek a new mortgage and an investor who is looking to review the alternatives to securitized mortgages.
The company known as New Residential Investment Corp is one of the many real estate investment trusts that include a number of non QM securities. Michael Nierenberg is the chief executive officer who is behind the development of many of the firms’ loan programs. New Residential offers services that help investors make decisions on what to put their money into. Michael Nierenberg has been very active in assisting investors who are looking to invest in mortgage backed securities. There is a difference between both qualified mortgages and non qualified mortgages that investors need to be aware of according to Michael Nierenberg.
Traditional underwriting of mortgages can be somewhat rigid. Due to the inflexible nature of some underwriting guidelines, a number of loan applications can be denied. These denials can even be given to high income borrowers. When a QM mortgage verifies the income of a borrower, it will be necessary for them to provide several pay recent pay stubs. The loan guidelines of QM mortgages can also result in denial for non traditional applicants such as self employed individuals, those who possess a substantial amount of assets, foreign nationals and a person who has had a recent sale of a distressed property.
During the past few years, non QM mortgages have become the ideal solution for borrowers who need to get around the rigid guidelines of traditional QM mortgages. Michael Nierenberg has been involved in establishing more of these programs. With a non QM mortgage, lenders use different underwriting guidelines that are much more flexible. While these types of loans are more flexible, they still consider the borrower’s ability to make the loan payments when deciding to grant them a mortgage loan. According to Mike Fratantoni of the Mortgage Bankers Association, all mortgage loans are evaluated based on the applicant’s ability to repay the loan. Those who are non traditional applicants are able to use their financial statements instead of W2 forms in order to inquire about a mortgage.