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74 But non-QM loans aren't vanilla and compe- tence in subservicing QM home loans doesn't necessarily translate into competence in subser- vicing non-QM loans. e COVID-19 pandemic demonstrated why specialization is essential in nonconforming servicing. Agency subservicers responded to COVID-19 by applying unified changes across conforming portfolios. Non-QM subservicers had to implement rules set by private investors responding differently to borrowers whose finances were upended. e Planet Management Group asset man- agement team created specialized programs for our non-QM asset holders based on individual borrower circumstances while keeping both investor portfolio strategy and compliance requirements in mind. We could make those adjustments because our asset management expertise and Monetization Engine technology allow investors to shift strategies quickly in response to changing markets. 2. DEFAULT MANAGEMENT THROUGH THE LIFE OF THE LOAN Having targeted technologies and strategies to identify early a newly originated loan's propen- sity for default or property issues impeding the ability to rent for asset-based originations is criti- cal to portfolio quality for non-QM portfolios. As a loan seasons, proper asset management can improve portfolio performance. e appli- cation of proactive strategies targeting high-risk borrowers, expanded special forbearance and loan modification options, debtor incentives for pre-foreclosure sales and a sense of speed and flexibility can all reduce losses when applied by expert asset managers and loan counselors. Keeping delinquencies from occurring, and rapidly addressing those that do happen, increases the likelihood that an investor can take advantage of the CFPB's Seasoned Non-Qualified Mort- gage Rule on converting non-QM loans to QM loans. For applications received on or after March 1, 2021, the rule allowed certain home loans held in portfolio for 36 months to be converted to QM status. To qualify, the home loan must meet cer- tain requirements, including a requirement that the home loan can have no more than two 30-day delinquencies and no 60-day delinquencies at the end of the seasoning period. 3. TARGETED TECHNOLOGY AND STRATEGIES Technology within the QM subservicing market is well-established with most servicers using one of a handful of tools. By contrast, the technology employed in non-QM servicing must be far more flexible to accommodate the diverse needs of asset investors. A solid non-QM servicing platform must be capable of creating custom workflows and unique default waterfalls. In a rapidly shifting market, today's investors realize that the ability to change strategy for an asset can preserve or even improve projected returns. Next-level technology provides customized reporting that allows asset owners to model outcomes based on "what if " scenarios. Planet Management Group's technology stack enables investors to identify and quickly implement strategies to improve results. 4. EXPERIENCE FROM LINE MANAG- ERS TO LEADERSHIP Maximizing the ongoing value of non-QM assets requires specialized knowledge at the loan and portfolio levels. Everyone from asset man- agers to leadership must thoroughly understand servicing with a non-QM spin. Having a team experienced with servic- ing non-QM assets makes the most sense. Non-QM assets shouldn't be treated like their QM counterparts, they require a different and diversified approach of creative strategies led by experienced managers to mitigate risk. Effective asset managers also oversee performance on current loans, such as ensuring payments are posted correctly, statements and letters are cor- rect and timely sent, and complaints are handled appropriately. Strong expertise is also essential to compa- nies intending to scale up and those seeking to minimize risk. 5. STANDARD OF EXCELLENCE IN OPERATIONS How asset managers operate and manage their portfolios matters. Having an experienced asset manager who operates efficiently is key to non-QM portfolio profitability. Planet's core servicing group provides operational excellence and strong support for key servicing functions, such as loan boarding, cash management, investor reporting, and default operations. In turn, Planet Management Group provides unique asset monetization engine platform provides lenders and their investors with transparency into performance and superior customer service. In such a highly competitive and regulated industry, operational quality must also encom- pass following and upholding complex servicing and compliance standards. Highly rated ser- vicers are constantly reviewed by rating agencies, state, and federal regulators and individual investors. ey are closer to understanding and correcting any compliance risks associated with servicing complex products, including non-QM products, which have become more of a focus since the subprime crisis. Adding non-QM volume to boost overall originations can be a worthwhile goal, especially with the support of a subservicer with in-depth knowledge and experience in managing noncon- forming portfolios. It's important to consider and identify the value and expertise offered by a non-QM servicing platform. Doing so could make a difference in how profitably your assets perform, especially in this shifting market. e views and opinions expressed in this article are those of the author and do not necessarily reflect or represent the views, policy, or position of Planet Management Group. Janina "Gigi" Woods is SVP, Private Client Services for Planet Management Group. For more than 30 years, Woods has built organiza- tional excellence through the development of people, process, and technology, and the management of executive-level relation- ships in default management, client services, and transaction management. Before joining PMG, Woods was SVP of Portfolio Default Manage- ment at Seneca Mortgage Servicing, where she was instrumental in building out the servicing platform, which was converted to PMG in 2016. She has held management positions at Wells Fargo Home Mortgage, Clayton/North American Mortgage Company, Sibley Mortgage Corpora- tion, and First Federal Savings and Loan, Rochester, New York. By: Janina "Gigi" Woods Feature