Like Non-QM Lenders, Angel Oak Mortgage Solutions Are Struggling To Sell Loans On The Secondary Market
Angel Oak Mortgage Solutions is the latest player to cut a sizable chunk of its workforce amidst widespread market volatility.
The company issued pink slips to 75 employees last week. This is about 20% of its workforce. The company cited the current economic environment that has challenged the entire mortgage market:
The government does not back Non-QM loans. Nor are they eligible for purchase by Freddie Mac or Fannie Mae. Non-QM loans are higher risk loans. Thus, they typically come with higher interest rates.
The pool of non-QM borrowers includes real estate investors, property flippers, foreign nationals, business owners, gig workers and the self-employed, as well as a smaller group of homebuyers facing credit challenges, such as past bankruptcies.
Angel Oak Mortgage Solutions is the among the largest nonbank originators of non-QM and specialized mortgage solutions in the country, working through brokers and correspondents. The company originated $101.6 million in volume in the past year with a monthly average of $7.8 million,
Angel Oak Home Loans LLC is a full-service mortgage lender with its own LOs. The company originated $2.44 billion in mortgages over the last year.
Angel Oak Companies also has its MBS conduit Angel Mortgage Trust. The company recently launched a total of six non-QM private-label securities offerings involving about 5,000 loans valued at $2.5 billion.
As rates rise, lenders are struggling to sell in the secondary market as investors are seeking higher yields. This liquidity problem has also caused non-QM lenders including First Guaranty Mortgage Corporation and Sprout Mortgage to abruptly shut down.
The decision to lay off or terminate employees joins other companies making similar announcements. Some have shut down wholesale lending all together. Namely, loanDepot, AmeriSave, and Mountain West Financial.