More Borrowers Want Permanent Payment Reductions

Mid-way through 2020, all of us thought the impacts of the pandemic would be temporary. We all made decisions based on this assumption, but now that it’s 2024, most of us have started to realize that the way things are simply the “new normal”.

The current payment behaviors of borrowers in the non-QM loan sector reflect this fact.

According to recent reports, borrowers haven’t been asking for modifications of their loans as much as they were in 2020, 2021, and 2022. Instead, more borrowers are requesting straight-forward payment reductions permanently.

This is a major deal for loan providers because it reflects a shift from the temporary deferral of debt to a permanent, long-term decrease in the amount of money the borrower is able to pay on a regular basis.

This shift in borrower behavior isn’t happening on a small scale. Reports show that modification requests involving reduced payments make up about 33% of the current changes to user accounts. Unfortunately, there’s been an increase in the amount of loans that become delinquent immediately following modifications.

These changes make sense, though, since there has also simultaneously been a rise in the amount of loans that are delinquent overall. As a whole, about 10% of loans are currently delinquent, with 6% of all loans requesting smaller payments.

Are You Looking for an Affordable Home Loan?

Do the impacts of 2020 continue to haunt your finances to this day? Have you struggled to secure a home loan due to your non-traditional financial situation, your lack-luster credit score, or another issue? If so, then it might be a good idea to research your options.

A non-QM home loan is an alternative type of home loan that can help provide funding for you even if you’re facing a non-traditional situation.

While most traditional lenders want you to meet specific standards, a non-QM lender can provide funding even if you don’t have good credit, you’re self-employed, you receive an inconsistent income, or you have other non-traditional situations going on. A non-QM provider is likely willing to work with you to help reduce your payments and secure a manageable arrangement that works for both you and your provider.

That said, you are more likely to pay more in the long run with a non-QM loan in order to experience the perks of approval. In general, non-QM lenders are going to charge higher interest rates to help offset the risks of taking on the non-traditional loan. They might also want you to make a higher down payment. That said, the arrangement can still be very beneficial for you, especially if your lender is willing to work with you to reduce the payments to a level that’s most comfortable for you.

Are you interested in learning more? Check out our loan options and requirements now to get a better idea of the products we offer. If you’d prefer to speak one-on-one with an agent who can help, then contact us now at (800) 413-0240.