It’s time to rethink your business model
The first quarter of 2021 forced the initiators to reconsider their economic models. Rising rates push down refi volume, with most experts predicting rates will rise throughout the 2021 balance. The housing market, meanwhile, is heating up. The rates are still low enough to encourage first-time buyers to consume and the COVID-19 pandemic has pushed a millennial movement towards the suburbs and ex-urbs which should have taken a decade. As they look to pivot to buy, a lender offers originators a way to rethink their business models.
Michael Kirk (pictured), vice president of wholesale sales at Acra Lending, explains how his company’s set of non-QM products and the set of services can play a crucial role for initiators who move towards new market conditions. In a preview, Kirk shared with MPA how versatility and flexibility will be crucial in this new environment and how Acra’s unique offerings serve initiators looking to become more versatile and play an absolutely crucial role as the market begins to tighten.
“I don’t think it’s a question of ‘should’ the initiators look at the next step in the market,” Kirk said. “It’s a question of ‘must’. Agency rates are on the rise in an unstable country, and initiators must consider their future pipelines and trading platforms to move forward. They must act now to determine what the growth and stability of the future of their business looks like … Even though they have had a banner year, rising rates will separate creators from their competition. It will take something special to surpass yourself and maintain profitability in this crazy market. “
That “something special,” for Kirk, is a diverse set of business plans that allow a creator to tackle a wide range of key market segments. Acra’s core non-QM product portfolio plays a key role in this regard, providing deeper penetration into local referral networks. The creator who knows the non-QM will simply pick up more business from each referral partner than he already has. The creator who doesn’t, leaves money on the table for his competitors. In an increasingly zero-sum market, this is a factor of difference.
Not only does the non-QM improve the local referral presence, but Kirk also explained that with the right foundation, a creator can turn these products into state and nationwide reach. Perhaps more importantly in the immediate term, the flexibility of non-QM will help greatly with a foreign buyer’s market teeming with pent-up demands due to the pandemic. When those floodgates open, a savvy designer will be there with the right product.
According to Kirk, the biggest challenge of non-quality management is more about the mindset than the eccentricities of a product. Authors may have misconceptions or expect the process to be complicated. If they can get over this and see the opportunity in the channel, Kirk believes they will find that the non-QM process is much easier and simpler than they ever imagined. The key is to move from a smaller agency mindset, to a more creative perspective that reflects the creativity of the non-QM process.
As the non-QM market itself becomes more competitive, Kirk explained that Acra’s mindset is key to what sets it apart. As an innovative lender in a vertically integrated ecosystem, they are empowered to experiment but know that the responsibility will not pass to someone else. It treats brokers as partners and strives to train them on these sets of products, regardless of their level of expertise outside of QM. It offers a personalized marketing platform and supports brokers when they start selling these non-QM products. When obstacles come, the Acra team is there to help.
While Kirk expects the webinar to show brokers why they need to look into non-QM now or risk being left behind, he hopes it will also show them the kind of supportive culture that exists at Acra, a culture they bring to work with their mortgage partners.
“If you don’t go into the non-QM market, you will be left behind,” Kirk said. “This is where the market is going. And Acra offers great reward with limited risk for it. We want to help our partners to grow because it is our culture. We believe that when all of our partners grow, our own growth is a guaranteed flaw. “
To learn more from Michael Kirk on the ways Acra can help you diversify your portfolio, check out the webinar here.