10% Down For Newly 1099’d Buyers; Taking Title in LLC; Closing While On Maternity Leave

I. 99.9% of Americans have no idea how big of a deal this is.

But the Non-QM (today’s quasi-subprime) space is getting brutally competitive now – and therefore far more flexible.

For example, we now have a non-QM loan with four highly unusual characteristics that have not been seen since pre-2008.

1. It allows us to use the full value of deposits (over the last 12 months) into personal (rather than business) bank accounts for income.
2. Borrowers can be newly 1099’d (independent contractor) or W2’d or both. In the past, borrowers needed to be 1099’d for 1 to 2 years at a minimum.
3. Borrowers can put only 10% down, rather than the 20% down payments that have defined this space since its inception.
4. Borrowers DO NOT have to be self-employed to use this program, as that is another common limitation to bank statement loans.

So, yes, this is a very big deal, as loans like these allow us to provide financing to a huge number of borrowers who were previously turned down with no alternative options.

And yes, non-QM guidelines may now be “too flexible” just like we saw prior to 2008.

But we’re not going to say no to these options if they enable our borrowers to obtain financing.

II. Can Borrowers Take Title (Vest) In An LLC?

So many of our borrowers want to vest/take title in an LLC that I sometimes wonder if anyone wants to take title the old-fashioned way…

But unfortunately, only Non-QM lenders allow borrowers to vest in an LLC.

Almost all of our standard, A-paper, “Qualified Mortgages” (Fannie, Freddie, FHA, Jumbo, VA) require borrowers to take title in their personal name.

Borrowers can deed into an LLC after close, but they can’t vest in an LLC at close. There are some risks too when borrowers deed into an LLC after close.

The good news for borrowers who insist on vesting into an LLC at close is that some non-QM programs offer rates as low as those for standard QM loans.

III. Can Borrowers Close A Loan While on Maternity/Family Leave?

Besides LLC vesting, the other big trend we’re seeing amongst our borrowers is procreation, as there is obviously something about getting pre-approved with JVM that makes borrowers want to have babies…

The good news is that borrowers who are on family leave (not currently working) can still obtain financing.

BUT – we do need a letter from employers that sets out:

1. Confirmation of return date from both the employer and borrower.
2. Proof of income while on leave.
3. Confirmation that they will be returning at regular hours and pay rate.