Have you been denied a mortgage loan in the past because of the strict federal rule changes? The criteria for the federal rules have locked you out, but you know you can make the mortgage payments.
So you have solid credit scores and money in the bank and you've been denied because your debt-to-ratio does not meet the regular standards. Some of the other reasons people have been denied are:
- you did a short sale on your underwater home a couple years ago, too recently to meet the four year minimum wait period set by Fannie Mae before you can get a new mortgage.
- Or you are a self-employed professional and business owner with irregular income flows, complex tax situations and periodically high debt levels.
- Or you are a real estate investor with multiple rental homes or commercial properties and seek to refinance and pull money out and have been denied by the conventional lenders.
The new segment of the mortgage market has started to take shape: "non-Qualified Mortgage" or "non-QM" lending. There interest rates are a bit higher than the standard market by three-quarters of a percent to 1.5 percent or more depending on lender and application specifics.
Lenders jumping into the non-QM space emphasize that they have no interest in funding subprime applications who lack the ability to repay their mortgages. Bill Dallas who is president and CEO of Skyline Home Loans of Agoura Hills, CA, says "we want good credit risks, but we don't think the Ozzie and Harriet one-size-fits-all underwriting" is the only way to go.
Skyline Home Loans is preparing loan offerings that allow debt ratios of 50 percent and depart from other QM standards for applicants who have strong compensating factors such as substantial down payment and reserves.
Impac Mortgage, which is a New York Stock Exchange-traded public company in Irvine, CA has begun making loans nationwide. In the past couple of months they have processed $30 million in mortgage loans to what they call "Alternative QM" mortgages to several categories of creditworthy borrowers with special needs.
New Penn Financial based in Plymouth Meeting, PA has recently entered the non-QM arena. They have begun offering its "Home Buyer Power" loans through retail branches and brokers in 47 states.
QM refers to the federal Qualified Mortgage rules that are designed to foster safe lending.
The emerging non-QM mortgage/lending market is looking to help you with your mortgage needs. Don't assume you can't qualify for a mortgage. Happy mortgage shopping!
Today's blog is courtesy of Bernita McKinion
Office and Acquisitions Manager
Home Land Investment Properties