Ex-underwriter alleges former company played hard and fast with rules to win business
A whistleblower who previously worked as an underwriter for a non-QM firm has denounced the lending practices at his former company, claiming they bent the rules on a regular basis to approve suspect loans.
The source claims the lender regularly failed to verify income, accepted credit scores as low as 500, and allowed borrowers to take out cash refinances intended for business use to purchase stocks in personal investment accounts.
The individual, called X in this report and who no longer works at the firm, agreed to speak to Mortgage Professional America (MPA) on condition neither his identity nor that of the company was revealed.
“They were not verifying assets, employment or income, and there was really no credit requirement,” he claimed. “I saw people get approved for a loan that had a FICO score of just 500.”
Non-QM, or non-qualified, is a type of mortgage with a higher interest rate that’s designed specifically for self-employed people who fall outside GSE guidelines.
Many borrowers are entrepreneurs with complex, multiple-source incomes who, despite having good credit profiles, are unable to obtain a loan approval from a bank as they are unable to provide two years’ worth of W-2 forms.
X joined the company late in 2020 before leaving in January this year. During his time at the firm, he was tasked with underwriting one- to two-year bridge loans on rental products.
He blamed the...
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