Loan Stream Mortgage plans to offer non-prime loans through a correspondent lending channel it’s launching. The opportunity emerged because rates increased and the refi business was a distant memory.

"When things get tough in the market, we look to capitalize when others are consolidating and use that time to grow in unique ways," says LSM's Chairman and CEO said Rabi Aziz, chairman and CEO of Loan Stream. The reason for the move is paucity of prime loans—given the rate increase.

But the chance, even for contrarians, is relatively short.

"We believe there is at least a 12 to 24-month period where other bankers could use our specialty services to launch their own nonprime divisions,” said Lina Colon the company's President. “If we help them grow through non-delegated correspondent services, we hope to keep them, down the line, when they are ready to go delegated."

Loan Stream is not new to the non-prime lending market. It entered the market in 2013 and has been offering them through wholesale and retail channels. Correspondents will be handled with a hands-on approach with sellers, educating them on the product, and helping them through the first few originations.

With average loan sizes over $600k, sellers don't want to risk having  loans on their warehouse lines that [investors will balk at purchasing] ,” said Serene Vernon, COO for Loan Stream. “It is very important to train each seller individually, helping them through their first loans with extra time and attention.”