How to stay competitive with specialized mortgage products

The mortgage industry is changing rapidly, and originators are focused on adapting to a changing market to remain competitive. HousingWire recently spoke with Lee Smith and John Gibson at Flagstar Bank about what originators can do to align their mortgage products and services with the ebb and flow of the housing market and what Flagstar is doing to help customers stay on top. of your game during this turbulent time.

HousingWire: Should originators focus on any specialty mortgage products, like home equity lines of credit or non-QMs?

lee smith

Lee Smith: Definitely. Both HELOC and non-QM loans are made to order for today’s mortgage market. While rising home prices may have kept some homeowners from buying, it has made it much more attractive for homeowners to stay where they are. The equity can be used for any number of purposes, including home improvement. The stars have aligned for HELOCs and creators should seize the opportunity.

The same is true for non-qualified mortgages. The lack of affordability is spawning new ways for originators to rate borrowers. Non-QM products are more expansive. They typically come with flexible guidelines, longer terms, alternative documentation, and more credit event forgiveness—things you wouldn’t see in agency loans but not necessarily risk factors. I can only speak for Flagstar, but our non-QMs are well-reinforced with protections for borrowers and originators.

HW: How can creators change their business models in a way that aligns with today’s changing market conditions?


John Gibson: Creators coming off the last few years of the ref boom now need to look at different products and at a different scale. If they want to grow with a new set of products, like non-QM loans, they’ll need to educate themselves and their clients about loans. The name itself, which is not QM, could raise concerns among customers. It’s all about mortgage affordability, and here’s a great opportunity for originators to help their borrowers understand what non-QMs are and what solutions they can offer today’s borrowers.

Old standards like FHA and VA loans still offer attractive options for first-time homebuyers, but some originators may be a little rusty and may need a refresher. Many companies have downsized and find they have to do things themselves that were previously done by staff. This could take time away from sales and put more pressure on finding ways to automate.

Also, businesses used to working with a warehouse lender need to know if their lender can accommodate all types of loans, not just vanilla agency loans. That is something else to consider. Also, this may be the time for companies to make the switch from broker to banker or vice versa.

HW: Mortgage technology is accelerating rapidly and originators are racing to keep up. How can they remain competitive with so many technological improvements?

SL: Our Flagstar MortgageTech Accelerator program is one way we work to stay ahead of the curve. It is the first and only accelerator in the US dedicated to mortgage technology – a Flagstar-sponsored incubator for cutting-edge technology in the mortgage space.

The program gives fintech startups direct access to and works with senior members of Flagstar’s mortgage leadership team on innovative ways to provide our customers with a seamless, frictionless, technology-enabled home buying experience. . We have just successfully concluded our third graduating class and look forward to launching the fourth accelerator program in early 2023.

In addition, we continually work to improve our technology to provide a more streamlined experience for our members. Almost all technology projects are driven by improving the customer experience, removing friction points, and making the process faster, more efficient, and simpler.

HW: What specialty products does Flagstar offer to help brokers stay ahead of the mortgage market?

JG: When the market changed, Flagstar moved quickly to add products that help our partners offer choice and affordability to their customers. These are some of our most popular products:

  • Advantage Non-QM with flexible guidelines including up to 55% DTI and 90% LTV with a minimum credit score of 680. Credit scores can be as low as 600 and loan amounts range from $100,000 to $3 million . Upcoming enhancements include a 40-year term and interest-only options, as well as bank statements as income documentation for self-employed borrowers.
  • An independent HELOC for brokers and non-delegated correspondent partners. Features include a minimum credit score of 680, lines of credit up to $500,000, and interest and principal only options.
  • Expanded ARM options, including our one-shot jumbo latch.
  • Jumbo ARM with 5/6, 7/6 and 10/6 options, up to $4 million on primary residences.

Flagstar has supported the broker and correspondent communities for 35 years, and we remain committed to them through every change and evolution of the business. Visit for more information.

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