Non-qualified mortgage (non-QM) lender NewFi Lending has launched a correspondent lending channel at a time when originators are fighting to grab production volume. 

“Non-QM product offerings are critical to any mortgage bankers’ offerings in today’s market. Newfi is leading the way in terms of innovation and service for these originations,” Dan Bayer, SVP of non-QM development and strategy, said in a statement.

As an affiliate of Apollo Global Management, Newfi can offer mortgage bankers the benefit of Apollo’s expansive resources and mortgage expertise, the company added.

The market for non-QMs, which doesn’t meet the Consumer Financial Protection Bureau‘s requirements for qualified mortgages, only represents about 4% of the first mortgage market, according to CoreLogic. 

But at times when overall industry transactions are dwindling, non-QM loans allow originators to serve a largely untapped market and expand their offerings to realtors and borrowers.

Correspondent lending is also a relatively bright spot for a mortgage industry that’s suffered from low origination volume. That’s partly due to the correspondent channel relying on small lenders’ production, such as community banks and independent mortgage banks that generally have a salesforce that works closely with local borrowers and realtors over the long haul. 

As of the first quarter of this year, market share for the correspondent channel rose to 29.5% from the last quarter’s 28.6% and from Q1 2022’s 22.1%, according to Inside Mortgage Finance data. The retail channel’s market share slipped to 54.9% of the overall originations pie in Q1 2023 from the previous quarter. The wholesale channel, meanwhile, rose to about 15.6% from Q4 2022. 

Founded in 2014, Newfi offers other specialized lending options, including debt service coverage ratio (DSCR) investment property loans, 40-year interest-only loans and alternative income loans — bank statement, 1099 and asset depletion loans.