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Loans Must Be “Salable”; No Exceptions No Matter How Strong a Borrower Is

Man signs a mortgage document. All loans must be salable meaning they can be sold on the secondary market.Major mortgage companies have gone out of business entirely b/c they could not sell a large block of their loans on the secondary market. Salability is an enormous concern and potential risk for every mortgage company.

Mortgage banks fund loans with large warehouse lines or lines of credit. They then sell the loans on the secondary market to other “investors” that either resell the loans or aggregate them and turn them into mortgage-backed securities.

But investors will not buy loans from mortgage banks unless they are 100% compliant – with underwriting guidelines, all regulations, and TRID. No matter how perfect a borrower is and how strong a loan is, it cannot be sold unless it is 100% compliant. There are no exceptions.

This is important to understand b/c strong borrowers ask us to make exceptions all the time, as do Realtors.

When mortgage banks get stuck with too many non-compliant, non-salable loans, they go out of business.

Jay Voorhees
Founder/Broker | JVM Lending
(855) 855-4491 | DRE# 1197176, NMLS# 310167