A specific area where the outside the box possibilities of nonconforming mortgages can help the market is in a profession aimed offering like for those who work in the medical field.
Kroll Bond Rating Agency recently came out with a report, "What's up Doc — Medical Professional Mortgages, a New Niche in RMBS?"
It noted historically, these loans have remained on bank balance sheets rather than being
"However, growing origination volumes and increased participation from prime private label residential mortgage-backed securities issuers suggest physician mortgage programs may begin to emerge as a distinct niche within the broader RMBS market," KBRA said.
Like many other jumbo products, banks see these as relationship builders for a field which has high income potential. But these loans have been moving into securitization channels.
Based on its observed origination volumes across major bank programs, KBRA estimates that medical professional mortgage loan production entering prime private-label channels could reach approximately $5 billion annually.
"While modest relative to the broader RMBS market, this volume is meaningful within niche collateral segments," KBRA said. "For comparison,
Redwood Trust's first medical pro RMBS
Redwood Trust on March 26 issued SEMT 2026-MED1, its inaugural medical professionals loan securitization via its Sequoia jumbo conduit.
This marks the ninth different product type securitized through Sequoia, the company's press release said.
It launched the medical profession in December 2025.
"As the housing market evolves, we remain focused on developing specialized solutions that meet the changing needs of homebuyers while expanding access to housing credit," Redwood Trust CEO Christopher Abate said in a press release. "Our Medical Professionals program is a compelling product for originators to offer their customers, and represents an attractive asset that we can acquire in both seasoned pools and on-the-run current production."
The highlights of the SEMT-MED1 transaction include:
- Dollar volume: $482 million
- Loan count: 607
- Average credit score: 769
- Weighted average combined loan-to-value ratio: 94.8%
- Servicer: Select Portfolio Servicing
The transaction was rated by Fitch Ratings and KBRA. The KBRA report called it the first deal of its type in the RMBS 2.0 market.
IMBs' opportunity to take on banks in jumbo lending
In his Mortgage Finance Roundup for April 1, BTIG analyst Eric Hagen said the underlying collateral is a slight departure for Redwood's normal prime jumbo shelf although it doesn't materially change the REIT's risk sensitivity.
"It's common for medical professionals to demand a jumbo mortgage, but oftentimes they get priced out of the super-prime channel because of a high debt-to-income ratio (especially younger doctors still carrying student loans), or because the individual has high income but low cash on hand," Hagen said.
"The niche in the market is an opportunity for Redwood Trust and other non-bank lenders given the nuances to the underwriting which require more flexibility versus most bank lenders, despite representing a typically high-income cohort with stable employment."
Why these lenders offer this product
For example, non-bank Gershman Mortgage has rolled out a medical professional product it offers as a white label.
This was a product which was fairly prevalent in the past, with a lot of lenders offering it, but in recent years it seems to have gone away, said Jeff Ogden, senior vice president of production at Gershman.
Gershman lends in a lot of large to mid-sized metro areas with a lot of hospitals and healthcare facilities, and it saw a need in the market.
The company is headquartered in Chesterfield, Missouri, in the St. Louis area. The locale has a lot of medical facilities and Gershman was asked over the years if it had something specific for these professionals, he added.
"Physicians tend to have a unique financial profile that doesn't always fit into the agency box," Ogden said. "Specifically, they usually get out of school with higher student debt than the average graduate, and it creates a hurdle to home ownership."
Many nonconforming lenders underwrite student debt similarly to agency standards, which means most catch-all jumbo programs do not work for these applicants.
Add to this the transient nature many doctors have early in their careers with residencies and fellowships which might result in multiple relocations.
"A program like this helps to give them an easier path to home ownership," said Ogden.
The program is available through Gershman's retail channel.
Certainty Home Lending also has a doctor program.
"With doctors, you have different milestones in their life where they want to be able to buy and we've got a certain certainty around their career that we can lean on," Shadi Kamran, national business development & market growth executive said.
These programs allow underwriters to use future income as part of the eligibility determination. Traditional jumbo program guidelines don't allow income unless a person is already employed in the position, he pointed out.
Newrez, the mortgage lending unit of Rithm, has joined the party with its Medical Professional Home Loan. It is being offered through the retail, direct-to-consumer, wholesale and joint venture channels.
Among the terms includes 100% financing with no traditional private mortgage insurance needed. The product also offers flexible debt-to-income treatment and it is available for purchase and rate-and-term refinance loans on primary residences, condominiums and cooperatives.
"By taking a more flexible approach to student loans and other early‑career financial realities, we're helping qualified borrowers overcome common barriers and pursue the dream of homeownership sooner," said Bob Johnson, head of originations at Newrez, in a press release.
