We funded a loan yesterday for a buyer who is in foreclosure, and his rate was 4.875% (he put down 45%). His foreclosure involved a property in Hawaii that he thought he lost 6 years ago, but the paperwork was never processed properly so it lingers to this day (even though it is not on his credit report; records searches brought up the foreclosure). Our loan involved a purchase in the South Bay.
No FHA or Conventional lender would touch the borrower, despite his high credit scores and income, and huge down payment. And our jumbo investors ran screaming from the room when we even tried to discuss it.
The main point is that Sub-Prime is back, and in a good way. “Stated Income/Stated Asset” loans are NOT coming back, but there are now alternative lenders for strong borrowers with major issues and legitimate explanations.
Our sub-prime lenders still require ample paperwork and income documentation, and their rates are much higher than those associated with conventional or FHA financing. But, they are far better than “hard money” alternatives with rates in the 10% range.
As an aside, when we closed the above referenced transaction, the selling agent raved:
Just want to express my sincere appreciation to you and your amazing staff, in pulling off what everyone else thought was the impossible.
Jay, you and your team from the onset had a clear and concise understanding of the task in finding the lender that would fit my clients need. The moment that lender was identified the file was in motion. There were many involved along the way and anyone assigned to the file, made the transition to the next seamlessly. We know in this industry it rarely runs that smooth, we are faced with many challenges, most out of our control however, your staff managed any issues with such confidence it was so reassuring to my client.
You have assembled the most talented and dedicated staff with the highest professionalism and stellar customer service, bar none. Each individual involved identified themselves, communicated their task and explained the next sequence and their expectations. It was an absolute delight to work with you and your staff, from the very first introductory phone call to the last congratulatory email.
No doubt you will be in my file as a referral to my clients whenever the need arises. Again many Thanks for a job well done!
Founder/Broker | JVM Lending
(855) 855-4491 | DRE# 01524255, NMLS# 335646