Mega Capital Funding returns to the non-QM lending space
Mega Capital financing just became the latest company to re-enter the unskilled mortgage industry with the launch of several new product lines.
Its new non-QM “Mega Elite” and Debt service coverage ratio The product line includes alternative income documentation products such as its three- and 12-month bank statement products, the CPA and P&L prepared by borrowers and asset utilization, and its service coverage ratio. investment property debt with 1: 1 options and no ratio.
According to price sheets, through its “Elite Non-QM” product, Mega Capital has loans between $ 250,000 and $ 2 million, with a maximum debt-to-income ratio of 50%. The maximum LTV is 70% for purchase and 65% for refi.
The offering team will be led by Mega Captial Funding CEO Brian Na as well as non-QM veterans Rikki Danganan and Will Fisher.
“With our initial proprietary product offering, we have decided to focus on a specific non-QM segment, which will allow our brokers to deliver enhanced solutions and our capital partners to meet their return targets,” Na said.
HousingWire recently spoke with Mike Fierman, Managing Partner and Co-CEO of Angel Oak, about the non-QM loan outlook for 2021 and how Angel Oak’s originate to hold model is benefiting initiators.
Presented by: Angel Oak
In March, Mega Capital Funding became one among many mortgage lenders who have ceased all non-quality management operations.
The company sent a message to brokers in which it said: “Due to retractions in financial markets in response to the coronavirus pandemic, and uncertainty in the non-QM space, MCDI will suspend funding for all. our non-QM. and products not related to quality management. This includes registering, locking or pre-locking loans. Any loan with signed documents, we will finance it. Any loan without signed documents will be suspended for the foreseeable future or until market stability returns. “
Today, many investors are once again returning to the non-QM space. Mike Fierman, Angel oak managing partner and co-CEO, recently told HousingWire he expects the non-QM market in 2021 to grow rapidly as the economy recovers from the pandemic.
He noted that in a normal year, a healthy non-QM market would report around $ 300 billion in creations per year. In 2020, Fierman said, non-QM origination totaled around $ 18 billion, so there is plenty of room for growth.
And in addition to an apparent increase in appetite for non-quality management on the investor front, there is also room for much higher risk in the market as a whole.
the Housing Finance Policy Center latest credit availability index shows that mortgage credit availability was slightly below 5% in the third quarter of 2020, down from 5.1% in the second quarter of 2020 and the lowest since the index was introduced.
Overall, the availability of credit in the mortgage market continues to loosen. Availability of mortgage credit increases in January, according to the mortgage loan availability index of the Mortgage Bankers Association. The MCAI rose 2% to 124.6 in January. A drop in the MCAI indicates that lending standards are tightening, while increases in the index point to sagging credit. The index was benchmarked at 100 in March 2012.
“The growth in credit availability in January coincides with a housing market that is set for a good start to the year,” said Joel Kan, MBA associate vice president for economic and industry forecasting. “The improvements were driven by the conventional segment of the mortgage market, with lenders adding ARM loans with lower credit scores and higher LTV requirements. While ARM loans have only made up a very small portion of loan applications in recent months, lenders are likely looking at a strong home buying season by expanding their product offering. “