Angel Oak’s Tom Hutchens On New Growth Path For Non-qms As Rates Ease

When mortgage rates stayed higher for longer over the past few years, originators increasingly turned their attention to nonqualified mortgages (non-QMs). But that resurgence may not lose momentum even if rates decline in 2026.

“We traditionally have seen nonagency volumes represent about 10% of the mortgage business. If you figure it’s $2 trillion a year in annual originations, that’s a $200 billion non-QM market,” Tom Hutchens, president of Angel Oak Mortgage Solutions, said in an exclusive interview with HousingWire.

“Last year volume was $80 billion to $90 billion. Market forecasts are in the $150 billion range for 2026. We have a long way to go.” 

In 2025, Brookfield Asset Management acquired a majority stake in Angel Oak Companies — parent to the lender and investment manager Angel Oak Capital Advisors — while maintaining the businesses’ operational independence. For the lending arm, the deal supports the delivery of a broader set of nonagency solutions. Last year, Angel Oak launched five-year and seven-year adjustable-rate mortgage (ARM) products.

Another product with potential to expand the non-QM universe — traditionally dominated by bank-statement and debt-service-coverage ratio (DSCR) loans — is the home equity line of credit (HELOC). Today, HELOCs represent about 10% of Angel Oak’s portfolio, but Hutchens said the share could double, depending in part on the growth of first-lien production.

“At the same time that we have all this home price appreciation and affordability pressure, those that own homes have record amounts of equity,” Hutchens said. “It just makes a lot of logical sense that people would want to do debt consolidation. Or maybe they’ve been in this house for five years — it’s time for a renovation of the house.”

Angel Oak distributes its non-QM products through wholesale partners and correspondent lenders. The company said it increased originations by 33% in 2025, while its broker partner network grew by 30% and the number of account executives expanded by 22. The lender expects to add another 40 AEs in 2026.  

Editor’s note: This interview has been edited for length and clarity.

Flávia Furlan Nunes: What do you expect for the macroeconomic landscape in 2026?

Tom Hutchens: I definitely see the Fed, with this new chair, easing rates. At what pace? I don’t expect it to be a high pace, but it’s reasonable to expect a few more — maybe quarter-point — rate reductions throughout 2026.

And ultimately, lower borrowing costs always help housing. We still have some headwinds from home price affordability that haven’t gone away, but every reduction in agency rates helps with that hurdle. I see it getting better throughout the year.

It’s not going to be some major shift, the markets are going to take off and rates are going to drop to 4%. In fact, I hope that doesn’t happen, because that means something traumatic has happened. So, not wanting that, but certainly easing of the Fed funds rate will help the economy, borrowers and buyers alike.

FN: On the regulatory front, what changes could help the market?

TH: There’s not enough supply in the market, and that’s been going on for more than 10 years. It’s not a new phenomenon. It just continues. But now that lack of supply, post-COVID, with record-low interest rates, really drove home prices a lot higher. Property taxes have doubled in a lot of markets, along with insurance costs. You just add it all up, homeownership has just become a lot more expensive. 

These states that are talking about removing property taxes, that would be a very big boon, and then maybe some other states would follow suit. We’ve got to make homes more affordable.

FN: How does this landscape contribute to lenders’ renewed interest in non-QM loans?

TH: Agency rates being elevated — comparatively speaking, not long-term elevated — have certainly slowed down agency production, which has forced originators to get to know non-QM. Before, when everybody was so busy with refis and everything was just humming along for agency production, they didn’t “have time” for non-QM. They wanted just the agency, DU (desktop underwriting), auto-approved, close and move to the next loan.

Non-QM has seen a resurgence in the last couple of years because more originators are paying attention. That’s what I’m most excited about. As the agency market moves, we have originators now that are experienced in closing non-QM loans. I believe most of them will continue to include non-QM as part of their business going forward.

FN: Do you see some risks emerging because of this renewed interest in the product?

TH: No, I don’t at all. Non-QM is not the subprime from the Great Financial Crisis. You can’t even talk about them in the same sentence. They’re so different. We are still seeing very high FICOs, low loan-to-values, extremely qualified, high-net-worth borrowers.

This hasn’t really been an expansion of guidelines, which is what happened in the Great Financial Crisis. Guidelines were thrown away. This has really been finding an underserved market and creating products that provide liquidity and opportunity.

After the Great Financial Crisis, for five years there, if you didn’t qualify for a mortgage with your tax return, you had no choice — no way to get a loan, no way to buy a house. We’ve worked hard now for 13 years just expanding awareness for these borrowers and potential buyers that these loans are available. The proof is in the pudding.

FN: But what is the potential for non-QMs?

TH: We traditionally have seen nonagency volumes represent about 10% of the mortgage business. If you figure it’s $2 trillion a year in annual originations, that’s a $200 billion non-QM market. Last year’s volume was $80 billion to $90 billion. Market forecasts are in the $150 billion range for 2026. We have a long way to go.

FN: What products show potential in the non-QM universe?

TH: The stalwarts of non-QM are the bank-statement loan for a self-employed borrower, and the DSCR loan for professional investors. Those two make up 90% or more of the non-QM volume.

However, we are seeing a lot of opportunity and growth ourselves in our HELOC business. At the same time that we have all this home price appreciation and affordability pressure, those that own homes have record amounts of equity. The last study I saw showed over $12 trillion of tappable home equity.

And I just mentioned that the mortgage business does about $2 trillion a year. There’s six years’ worth of volume available just on home equity. And almost 70% of current mortgage holders have a rate below 5%, so they don’t want to get rid of that — especially if they’ve got a 3% or 3.5% loan.

There’s record credit card debt, which is very expensive. Those are 20% or higher interest rates. It just makes a lot of logical sense that people would want to do debt consolidation. Or maybe they’ve been in this house for five years — it’s time for a renovation of the house.

FN: For Angel Oak specifically, what is the share of HELOCs in your portfolio?

TH: From an origination standpoint, it’s 10% of our volume. But we see that continuing to grow, and we expect it to grow because this equity is not going away.

Even as the market continues to improve and agency rates come down, there are still going to be people who are locked into a rate. They’ve been locked in now for a number of years, and it’s time to tap into that equity without having to get rid of the rate or sell the property. The investor appetite is high because of the coupon, which is higher than the non-QM first liens. The majority of these loans are being securitized just like a first lien.