Despite steady growth in the secondary real estate and investment property markets, Fannie and Freddie recently announced that they would limit their purchases of mortgages in these categories. Without the agencies to turn to, many creators are wondering where to go to serve their clients. To find out, MPA spoke to three executives from Luxury Mortgage Corp.’s elite account. Michael Nuzzo (pictured above), Frank Borelli (pictured center) and Lawrence Maitlin (pictured below) what originators need to do to keep this crucial business going.
MPA: What does this agency announcement to limit home and investment mortgage purchases for borrowers mean? What does it mean for Mortgage professionals?
Frank Borelli: “The purchase of second homes has increased significantly from year to year, and the demand for investment property is also strong. One reason for the surge in second home purchases was the ability of more people to work remotely, including from popular tourist and vacation destinations. However, the agencies recently announced that they are limiting their second home and investment mortgage purchases to 7% of their total portfolio. As lenders adjust to this newly set limit, the cost of these agency mortgages has increased and is likely to continue to increase as agency lenders become limited by the limit and agency funding becomes less readily available. “
Lawrence Maitlin: “Our easy-access cash flow product is designed specifically for 1-4 unit investment and mixed-use properties. No income, employment information, or tax returns are required. Each of our other non-QM Products (account statement, 1099 only, Asset Qualifier and Full Doc) enable investment properties and second homes as well as primary residences. “
MPA: What are the non-agency options?
LM: “Our non-agency products can help many types of borrowers who cannot get agency or prime jumbo funding. Our bank statement and the 1099 Only programs help self-employed borrowers without having to file tax returns. Borrowers with high wealth but low incomes or even unemployed can only qualify for the use of assets under our Asset Qualifier program, including pension funds and Bitcoin. Real estate investors who want to expand their portfolio or make payouts only qualify as part of our investor cash flow program with the cash flow of the property in question. We also offer solutions for borrowers who have been lenient, need a stake in an LLC, or want an unlimited payout (max 65 LTV). “
MPA: What type of borrower would be best for these off-agency solutions?
FB: “The non-agency solutions we offer will appeal to many types of borrowers. Investors are well served with our products. Self-employed borrowers often have special needs that our products meet. The pandemic over the past 12 months has been challenging for borrowers in general and our products are designed to help them get the funding they need. We have solutions for borrowers who have been lenient and / or disrupted their streams of income or are in various ways not served by traditional agency policies or hindered by agency credit limits. “
MPA: How can brokers and originators access these non-agency solutions?
FB: “These solutions are available to our approved brokers. Luxury Mortgage broker approval process is available through Comergence. Most approvals take less than 48 hours after a full package has been submitted. Once approved, we will grant access to our portal at luxurymortgagewholesale.com, where loans can be submitted electronically. Our website also has an easy-to-use pricing engine for quick quotes and product information, as well as helpful tools such as guidelines, checklists, forms and worksheets. However, the most important resource is always provided by your account manager. If you don’t have one, please make an inquiry on our website or contact one of us directly. “
MPA: What does luxury mortgage in particular offer to fill this gap?
Frank: “Luxury Mortgage has two product lines to fill this gap: (1) Simple Mae and (2) Simple Access. The Simple Mae product was recently released to meet these second home and investment property needs with a qualification similar to the agency’s guidelines but without the agency buying restrictions imposed.
Our Simple Access (Non-QM) product line also enables these property types to have LTVs of 80% for purchase and rate & term refis or 75% for cash-out refis. We also allow loan amounts of up to USD 3.5 million for Pur / RT and USD 2.5 million for CO. Simple Access consists of the following five programs: (1) Investor Cash Flow (2) Bank Statement (3) 1099 Only (4) Asset Qualifier and (5) Full Doc.
Our Simple Access Investor Cash Flow program is specifically designed for 1 to 4 unit investment properties to enable borrowers to qualify based on a Debt Service Coverage Ratio (DSCR). The DSCR is calculated simply by dividing the rents by PITIA. However, we do not have a minimum DSCR requirement on this program for a borrower with 700+ credit scores and LTVs up to 70%. “
MPA: How does Luxury Mortgage ensure adequate processing times for these loans during a highly competitive market period?
Michael Nuzzo: “Everything starts with people, and we have the best and most experienced operating team in the industry. We prioritize purchases, send out the first CDs as early as possible and track the COE data and the requested refinancing deadline throughout the process. We have a top notch pipeline manager overseeing the entire process, as well as a dedicated account manager, account manager and product coordinator assigned to each broker and file. “
MPA: What should brokers and originators get from this news about new agency limits?
MN: “As the agencies continue to work on exiting their conservatoire, there will likely be more and more changes to the products and services they can offer. As the process proceeds, there will be an increased need for alternative products that allow borrowers to access creative finance from a variety of sources. Luxury Mortgage Corp is uniquely qualified to respond to changes in the marketplace and create new products that fill in the gaps left by the agencies. This is particularly true in high cost areas on both coasts and in other areas where there is a high concentration of self-employed borrowers and real estate investor properties. “
MPA: Why should mortgage professionals consider working with Luxury to fill that void?
MN: “Luxury Mortgage Corp has always specialized in providing creative financing solutions for borrowers who are underserved by agency offerings. Our loans are manually drawn by experienced professionals who understand the unique profile of each borrower. You are empowered to apply our credit policy in our sole discretion to make exceptions when necessary and justified and to ensure that we make reasonable credit decisions that are beneficial to the borrower, the broker and the Luxury Mortgage Corp. function. Our goal is simple, we strive to offer the best products, prices and services in the industry. We won’t let you down. “
FB: “Luxury Mortgage specializes in developing bespoke solutions for borrowers who are underserved by the agency offerings. Our products are drawn by people who understand the unique human circumstances and take a holistic approach to their credit decisions. We will listen to and fully review each scenario and look for exceptions to our guidelines where necessary and justified. “