In the years since the crisis, the industry has unfairly lumped non-QM borrowers in with subprime borrowers. Regulatory environment prevents a subprime repeatThe subprime collapse was about more than bad loans. Under the Credit Risk Retention Rule, finalized by six federal agencies in 2014, sponsors of mortgage-backed securities must retain at least 5% of the credit risk of the assets they securitize. Every lender, including non-QM lenders, must verify that the borrower can afford the loan before closing. The system punishes bad non-QM underwriting in a way the subprime market of 2005 never did.