In this week’s episode of the Power House podcast, host and HousingWire President Diego Sanchez chats with Tom Davis, chief sales officer at Deephaven Mortgage. In this conversation, the duo explore niche lending, second lien product opportunities and demand for non-QM. Deephaven’s focus on non-QM lending is expected to drive its volume past $80 billion in 2025.
This interview has been edited for length and clarity.
After exploring Davis’ background, the duo dive into a discussion on why brokers should consider working with non-QM specialists instead of multi-product lenders.
Diego Sanchez: There are multi-product lenders and non-QM specialists like Deephaven. Why do you think brokers should work with a specialist instead of a multi-product lender?
Tom Davis: When you’re working with a professional and you want expertise, you’re going to want to work with someone who is the expert in your market. For Deephaven, we’re known for our expertise, knowledge and focus. If a broker is working with an investor that happens to dabble in non-QM, then they’re not going to get all the best practices we’ve aggregated over the last 12 years.
Diego: We’ve kicked off 2025 with mortgage rates that haven’t done much except go a little bit higher. A lot of folks were expecting a decline in 2025. Is this environment good for a non-QM specialist like Deephaven?
Davis: Either you take market share or someone takes yours, right? Last year was one of the most challenging years, and the year before was really challenging too. But our production was up over 70% over ’23 levels and we had an all-time record in 2024. And so we’re forecasting our growth into 2025. We’re looking at product expansions and introducing products that we have or through our sister company Anchor Home Loans, which specializes in residential transition loans (RTLs).
For example, 30% of purchase transactions were new construction last year. If you’re a loan officer, you should have a construction product that focuses on builders, developers and Realtors.
Davis also mentions the importance of offering investor loans, Debt-service coverage ratio (DSCR) loans and other options to accomodate trends with investors, self-employed buyers and more.
Davis: So, it’s understanding all those trends, right? And, its focusing on areas like construction, non-QM, the fix-and-flip and second lien production. That’s where the growth is at.
To close the conversation, Davis explores Deephaven’s focus on home equity and new construction products in 2025.
Diego: Why the push into home equity?
Davis: Rates are gonna remain higher for longer. Once again, credit card debt is at an all-time high at $1.6 trillion, followed by auto loans at $1.1 trillion. These higher rates and inflation have driven the cost of living higher. So, people are gonna have to tap into their equity for renovations, debt consolidation and better cash flow. So, there’s a ton of need there.
New construction has been 33% of all purchase transactions, right? Financing for mid-tier builders has become less liquid or choppy compared to the mega builders, right? The largest homebuilder in the United States last year built 66,000 homes. If you have a 5-7 million undersupply with this migration, there’s long-term demand there, and the mid-tier guys are the ones who need the financing.
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