Non-agency is not subprime. The mortgage industry needs to start acting like it.

In the mortgage industry, no word carries more stigma than subprime. For anyone who lived through 2008, it brings up memories of falling home values, rising foreclosures and a financial system that nearly came apart at the seams. Pinning that same reputation on non-QM lending is a mistake the industry can no longer afford. In the years since the crisis, the industry has unfairly lumped non-QM borrowers in with subprime borrowers. That misconception is costing the industry more than it realizes and doing real damage to borrowers who deserve better from the system designed to serve them. To understand why, it helps to remember what subprime actually was, because it was not one thing. It started with a legitimate purpose. Subprime and its close cousin Alt-A were built for borrowers with real income who struggled to document it through conventional means. Those early products carried reasonable discipline and served people who were genuinely creditworthy but poorly served by a system built around W-2s and tax returns. Then the guardrails came off. Lenders started offering stated-income loans, where borrowers could write down whatever income they wanted, and no one checked. Then came NI...