A Large Lender Closes Its Doors

One of the largest Non-QM mortgage lenders, Sprout Mortgage, closed abruptly last Wednesday with NO WARNING and all of their borrowers’ loans will NOT close. As loan volumes shrink I expect this will happen more often especially in the Non-QM world of lending. What is Non-QM lending? Non-QM loans are bank statement loans, DSCR loans for RE investors, non-warrantable condos, and loans for foreigners.

In other lending news Fannie Mae announced at end of June that their underwriting software will approve fewer loans for borrowers with higher layered risk levels such as lower Ficos, higher debt-to-income ratios and especially cash out refinance loans. This started on Sunday July 10th.