Non-Qualified Mortgage Loans

The session focused on non-qualified loans to provide lending solutions for individuals outside the traditional mortgage market. The presenter emphasized that many individuals, due to their unique situations, may not qualify for a traditional mortgage. However, non-qualified mortgages provide a way for them to still receive loans, albeit with usually higher rates and other nuances. The individuals best served by Non-QM loans include the self-employed, real estate investors, those without a Social Security number and/or foreign nationals, and those with significant credit event(s), among others. The presenter went into the different types of Non-QM loans and explained the main facets of each. First, he explained the Full Documentation Loan. He stated that this type of loan assists clients who usually have just missed a traditional loan due to one of the mitigating factors such as credit score, amount of reserves, etc. Further, he explained that these loans have interest only options, can apply to all occupancy types, and have passive asset utilization. The next type of loan discussed was the Bank Statement Loan. This type of loan does not look at income or tax returns, but instead focuses on deposits made on bank statements withing the last 12 to 24 month period. He went on to explain that bank statement loans can lend up to $3.5M, have interest only loans available, and allows for up to a 50% expense ratio to be used to determine eligibility. The next loan was the Asset Qualifier Loan. This loan uses assets to qualify for the loan, no debt-to-income ratio is obtained. He added that these are ideal for high net-worth clients with unique income streams and that rates hover currently around 8%-9%. Another loan discussed was the Investor Cash Flow Loan, aka a Debt Service Coverage Ration (DSCR) Loan. The presenter explained that these loans focus on the property itself for loan qualification and not the individual. The cashflow and income stream capability of the property is taken into account vs. the debts and expenses on the property. The Buy Now Sell Later Loan, CCM Bridge Loan, Non-Warrantable Condo Loan, and the Foreign National Loan were also discussed along with the main facets of each. The next part of the presentation involved specific client case study examples and how Non-QM loans helped with each. The nuances of each client case was discussed, along with what problems each faced in terms of obtaining traditional financing, before discussing how their problem was solved with a specific type of Non-QM loan befitting their situation. The final section involved Q&A with those attending the session. Pertinent issues discussed here included methods to access home equity including cash-out refinancing as well as HELOCs. Reverse mortgages were also discussed here as another strategy applicable to some clients.