The FHFA’s announcement to reduce mortgage purchases to 7% of a lender’s second home and investment property pipeline has messed up the volume of some originators. However, the industry should remember that this will have a more immediate impact on the borrowers themselves. As the model by which some investor clients build their entire real estate business changes, brokers and correspondents need to focus on those clients by providing options and training to help them navigate this change and grow their business.
This is the view of Keith Lind (pictured), Executive Chairman and President of Acra Lending. He stated that while notQM Lenders will benefit, more investors will look for products that allow investors to access non-QM programs backed by private capital. Lenders and originators, in turn, need to focus on what this means for the individual borrower. He explained that while this could mean slightly higher interest rates and higher monthly payments, the underlying strength of the market, combined with the right products, will continue to help investors thrive.
“I think if you’re buying a second home or investment property, the cost of that risk has just gone up because of the cap,” Lind said. “If you are forced to go into the private market, the mortgage rate will definitely be higher, but there are more loan options to choose from. There are many options available to borrowers, brokers and our correspondents. If you are looking to buy an investment property or a second home, just use a different route. “
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In this environment, Lind believes that borrowers, brokers, and correspondent lenders should work to quickly expand their knowledge of non-QM products in order to better serve customers. He sees this move by the FHFA as somewhat motivated to reduce the risk burden on government balance sheets. If the real estate market collapses, it sees second homes and rental properties as likely riskier. He also assumes that the agency’s already strict guidelines will likely tighten further, which will lead to more loans being given to non-QM lenders.
The benefit of learning non-QM products from a lender like Acra is the great flexibility they offer brokers, correspondents, and their retail customers. They can accommodate borrowers and originators with very special needs with a range of products including bank statement loans based on three, twelve, or twenty four month worth of information, full doc loans, or even top notch jumbo products.
Acra is also there to train the borrower at every stage of the process. You see the credit, Lind said, as a partnership between them, the Mortgage professionaland the borrower. Your borrowers, brokers, and correspondents can draw on Acra’s expertise in navigating loans that are outside of the agency’s guidelines, as well as their expertise in advising on difficult deals that require everyone’s creativity.
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Most importantly, Lind emphasized that Acra is there to help the borrower first. Acra can also help ensure the satisfaction and continued business of its broker and correspondent partners.
“It starts with training the products we offer our borrowers, brokers and correspondents, whether through webinars or educational materials. We work to ensure that everyone understands our suite of products and its options,” said Lind. “This has not only helped the broker and correspondent understand what we are doing, but also has helped the borrower understand what products are available to them so they can buy the second home or investment property they know about that he can afford it. “