Only About a Fifth of Lenders Plan to Originate Non-QM Loans

It’s still pretty early days for the Qualified Mortgage rule, but a new survey from Fannie Mae revealed that most lenders don’t plan to take part in non-QM lending.

Overall, 80% of respondents indicated to Fannie Mae that they “do not plan to pursue non-QM loans” or would simply “wait and see.”

If you break it down further, 46% of lenders are going with the wait and see/business as usual approach, whereas 34% flat out said they don’t plan to originate non-QM loans at all.

However, responses did vary by the size of the institution in question.


For larger institutions (top 15% in terms of loan origination volume), 28% plan to actively pursue non-QM lending.

That compares to just 12% for mid-sized institutions and 17% for smaller institutions.

For those that indicated a willingness to originate non-QM loans, such loans are expected to account for over 15% of volume during the next three months.

However, larger institutions only expect non-QM loans to account for about 10% of their total volume, which makes sense given their size.

Interestingly, mid-sized institutions that said yes to non-QM expect nearly a quarter (22.73%) of their loan volume to fall outside the Qualified Mortgage definition, compared to just 18% of smaller institutions.

Mostly QM for Now…


Despite some lenders appearing hungry to originate non-QM, 84% of respondents indicated that at least 90% of their loan volume would fit the QM rulebook.

So it’s clear that it’s still a small piece of the overall pie, and until lenders get more clarity, which can only happen over time, it will continue to be nothing more than a niche.

For the record, 74% of lenders said their operational costs would rise thanks to QM, which could be passed onto consumers in the form of higher interest rates and/or fees.

Another 36% said they expect to tighten credit standards as a result of QM, while just six percent expect to ease their underwriting guidelines.

Analysts believe that lenders will originate roughly $50 billion in non-QM loans this year, but that it will eventually grow to be a $400 billion business annually.

Of course, that hinges on the temporary exclusions being lifted once Fannie Mae and Freddie Mac exit conservatorship.

If you’re wondering who is currently saying yes to non-QM, take a look at this list of lenders and their offerings.

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