May 14, 2024 • 25 mins
In this episode of "Loan Officer Training," we dive into the intricacies of structuring loans for foreign national borrowers. Serving international clients presents unique challenges and opportunities for loan officers, requiring a deep understanding of regulatory requirements, documentation processes, and risk management strategies.
Join us as we explore the essential elements of structuring loans for foreign national borrowers. From navigating visa statuses and residency requirements to assessing creditworthiness and income verification, we'll provide actionable insights and best practices to help loan officers navigate this specialized area of lending.
Discover the key considerations when evaluating foreign national borrower applications, including cultural nuances, currency exchange risks, and legal implications. Learn how to tailor loan structures to meet the needs of international clients while mitigating potential risks for both borrowers and lenders.
Whether you're new to serving foreign national borrowers or seeking to enhance your expertise in international lending, this episode equips you with the knowledge and strategies to succeed in this dynamic market segment.
Tune in to gain invaluable insights and practical tips for structuring loans for foreign national borrowers effectively.
Join The Mortgage Calculator at https://themortgagecalculator.com/join
About The Mortgage Calculator:
The Mortgage Calculator is a licensed Mortgage Lender (NMLS #2377459) that specializes in using technology to enable borrowers to access Conventional, FHA, VA, and USDA Programs, as well as over 5,000 Non-QM mortgage loan programs using alternative income documentation!
Using The Mortgage Calculator proprietary technology, borrowers can instantly price and quote thousands of mortgage loan programs in just a few clicks. The Mortgage Calculator technology also enables borrower
Loan Officers for Unlimited Free Non-QM Leads & Trainings Join The Mortgage Calculator at https://themortgagecalculator.com/join
The Mortgage Calculator is a licensed Mortgage Lender (NMLS #2377459) that specializes in using technology to enable borrowers to access Conventional, FHA, VA, and USDA Programs, as well as thousands of Non-QM mortgage loan program variations using alternative income documentation!
Using The Mortgage Calculator proprietary technology, borrowers can instantly price and quote thousands of mortgage loan programs in just a few clicks. The Mortgage Calculator technology also enables borrowers to instantly complete a full loan application and upload documents to our AI powered software to get qualified in just minutes!
Our team of licensed Mortgage Loan Originators can assist our customers with Conventional, FHA, VA and USDA mortgag
Mark as Played
Transcript
Episode Transcript
Available transcripts are automatically generated. Complete accuracy is not guaranteed.
Restream recording May 14, 2 (00:16):
So welcome everyone.
My name is Kyle Hiersche.
I am the COO of the mortgagecalculator joined here by our
president, Nick Hiersche, andour sales manager, Jose
Gonzalez.
We are a lender that specializesin non QM loans and what we're
going to talk what we do everyTuesday, Wednesday, and now
Thursday evening at 7 p.
m.
Eastern is go through a in depthloan officer training and a
(00:38):
different topic and tonight'stopic is going to be how to
structure foreign nationalborrower loans, which is
something that we specialize in.
At here at the mortgagecalculator.
So I'm gonna go ahead and turnit over to Jose, our sales
manager with 28 years ofexperience as both a loan
officer and a realtor in SouthFlorida.
So obviously has a lot offoreign national experience on
(00:58):
both sides of the transaction.
So.
Jose, let's go ahead and getinto it.
How's everybody doing thisevening?
Oh, absolutely.
Foreign national borrower loans.
You gotta love them, especiallyif you are in South Florida,
which is the Mecca for mostforeign national borrowers,
Florida in general, the numberone for national borrower.
(01:23):
State.
So we will share someinteresting information with you
all at the end of thepresentation.
But let's get into how tostructure a foreign national
borrower loan.
So what exactly is a foreignnational borrower?
(01:44):
Right?
I mean, we always get asked thisquestion every now and then,
especially Because we have somany different borrower
classifications.
We have our foreign nationalborrowers.
We have our ITIN borrowers.
We have our non permanentresident alien borrowers and
resident aliens and borrowers.
(02:05):
So what exactly is a foreignnational borrower where they
would be, I guess, at the bottomof that totem pole in reference
to status and the U S becausethey don't have any status in
the U S they are a foreignnational borrower.
They are a citizen of anothercountry.
Now we do have an exceptionpossible for dual citizens, you
(02:27):
know, us citizens.
And a citizen of another countrywhere this borrower derives
their income and permanentlyresides outside the U S and has
done so for the majority oftheir life, they just may be
having to be born here.
And then grew up and livesomewhere else and have
established their whole life.
We do have an option for that,but nine times out of 10,
(02:48):
they're going to be a citizen ofanother country and they are
looking to buy either a secondhome or an investment property
here in the U.
S.
Never be a primary residencehere.
For national borrowers, nocredit score required, but.
If they do have credit, then theminimum credit score and trade
(03:12):
line requirements per theguideline for the program that
you're reviewing will apply.
Not all visa types areacceptable either.
Keep an eye out on diplomaticimmunity visas.
They're not acceptable.
If a borrower has a diplomaticvisa, they're not going to be
able to fund the loan for thembecause due to the fact of their
(03:35):
visa type.
They cannot no legal action canbe taken against them, so they
should not, they should not beable to foreclose.
Hence, borrower with diplomaticvisas are not acceptable.
The foreign national borrowercan never derive any of their
income in the USA for a foreignnational loan, right?
(03:58):
If they are actually derivingincome in the U.
S.
Like borrowers that have an E 2visa, right, the E 2 investor
visa, which allows them tolegally work here while they are
managing and running theirbusiness is the purpose of the E
2 visa.
Then that borrower could applyas a non permanent resident
(04:21):
alien as long as they meet theother requirements of having U.
S.
based credit, right?
If you have the income for theprogram type.
Usually it's if it's full doc,you would need to, you know,
like two years a year, dependingon what the program type is.
As long as you have the incomeand you have the visa type that
allows you to work here and thecredit, you could be a non
permanent resident alien.
(04:43):
Other than that, you're going tobe a foreign national, not an
ITIN borrower either, becausethe ITIN borrowers live here in
the U.
S.
permanently.
They work here.
They have U.
S.
based credit.
They just don't have status yet,but that it's not a foreign
national borrower.
Now obviously we have DSCR fornational loans.
We'll get into those details ina minute.
(05:04):
They don't require any incomeverification in any place for
the borrower.
Now to note here for MLOstructuring the deals, if the
borrower, borrower, excuse me,does not have any U.
S.
based credit, Then the loans aretypically priced with a 680,
680, 680 credit score whenyou're pricing it out so that
(05:30):
you get viable option.
There may be exceptions to thistypically it's going to be a
680.
So what are the eligibletransactions?
Well, there are four nationaltransactions eligible for
purchase and rate and termpurchases typically up to max 75
percent LTV, same for the rateand term.
Cat, we have cash out refioptions up to 70 percent LTV for
(05:55):
the for national borrowers.
Now we, now I break it down intoa couple of different
categories, basically astreamlined option.
For both full doc and DSCR and anon streamlined option.
Why do I have that?
Because we have multipleconduits for foreign national
loans.
Some in the streamlined,streamlined option depending on
(06:19):
if it's full doc or not, theborrower will not have to
provide credit referenceletters.
nor any type of bank referenceletter.
If it's full doc, they're goingto have to provide their CPA
employer letter, but they alsodo not have to provide a valid
visa on their passport if it'san investment property and
(06:40):
they're not signing into USA.
So what makes the streamlinedoption for full duct streamlined
is then no visa required if it'san investment property and
they're not signing in the USAand no bank and credit reference
letter needed either.
You only need to verify theemployment income depending on
(07:00):
the employment type.
So If it's a full doc nonstreamline option as some of the
conduits then will ask you for avisa, valid visa, regardless of
if they're signing or not in theUS, and they will also ask for
bank reference letters and orcredit reference letters,
anywhere from one or two.
Right?
So that's a difference, littledifference in pricing as well.
(07:23):
But this is, these arelogistical situations that can
happen.
That you have to discuss withyour borrowers regarding
procurement of certaindocuments.
They may not be where they canget them.
I say logistical, right?
So we do have the streamlinedoption and the non streamlined
option for ProDUCT.
(07:44):
Now if it's DSCR becomes alittle simpler because then on
the DSCR, streamlined option,not only is a borrower not
required to provide creditreference or bank reference
letter, they're also notrequired to provide any type of
income verification letter,obviously it's DSCR, or any kind
of CPA letter letter.
to verify residency expenses oranything like that.
(08:06):
Very super streamlined optionthere.
The non streamlined option onthe DSCR may require a CPA
letter to verify primary housingexpense, and a credit reference
letter will be required.
So, keep that in mind when youare pricing out your options.
Provide all options to yourborrowers, that's a good way to
(08:27):
provide it.
Here's a DSCR Streamlined optionand here's a DSCR Non
Streamlined option explaining tothem what, which is which, and
then the borrower may say, youknow what, I can't, these
documents here may present anissue for me right now.
So, sometimes it's, you know, alittle bit higher in the rate,
but it resolves the situation ofthe objective closing of the
(08:48):
property.
So, We talk about the full docloan.
As I mentioned there first,Billy point, I'd love to point
out stream line doc option doesnot require credit reference
letters, but if it's not thestreamlined option, you will
need credit reference letters,typically 43 percent DTI
(09:09):
manually underwritten selfemployed borrowers.
We would need a CPA letter fromthe country where the income
originates cannot be the U S.
And I'll show you sample lettersin a bit.
Salary to hourly employee wouldbe a verification letter
completed and signed by theiremployer.
We also have samples in aminute.
Now, depending on the option, Idid mention that we may require
(09:32):
two credit reference lettersfrom creditors in the country
where they permanently reside.
A resume of business experiencemay be required.
Now this does allow for partialoccupancy by the borrower
combined with short term rentalsince we do have full dock and
(09:53):
personal or entity ownership isallowed because on the full dock
you could have a second home.
We're not talking about, youknow, it's not always
investment.
I did state we could have asecond home or an investment
property.
So it could be personal orentity ownership is allowed.
Entity ownership, highlyrecommended.
And most likely on theinvestment property would be a
(10:15):
requirement.
So here, these are full docdocumentation requirements.
Keep an eye on the CPA letter,right?
For the self employed.
Now, what about our DSCR optionsfor foreign national?
Well, again, I like to state thestreamlined option does not
require credit, creditreference, nor a CPA letter.
(10:39):
No DTI on that one.
Sorry about the typo.
is manually underwritten loan.
Again, depending on whichoption, because it's, if it's a
non streamlined option for DSCO,we are going to require the two
credit reference letters fromthe country.
in the country where theypermanently reside.
Now, keep in mind the DSCRoption does not allow any
(11:01):
occupancy by the borrowers bythe borrower nor by the
borrower's family, right?
So, that's super important tonote there.
Hold on one second.
Notice I just corrected the typothere.
Eliminated the reference to DTIon my slide there.
(11:25):
So again, does not allow anyoccupancy by the borrower, nor
family, nor friends, right?
This is a pure investment onlyoption.
The DSCR option, since it is apure investment only option, if
you have your passport but don'thave your current US visa,
because you're waiting sixmonths to get that appointment
at the consulate.
That's why I stress the benefitof the streamline option for
(11:48):
investment properties, becauseif they don't have to come
permanent to sign in person,then that option will not
require them to have a visa ontheir passport if they reside in
a non visa waiver country.
And then real importantly there,we do have no ratio and low
ratio DSCR options when the DSCRis 0.
(12:09):
75 to 0.
99 and when the DSCR is lessthan 0.
75, we actually do have thoseoptions for foreign national
borrowers.
That's not very common outthere.
99.
9 percent of the foreignnational loans out there on the
DSCR loan option are going torequire 1.
0 minimum plus.
(12:29):
We have options going 0.
75 to 0.
99 and below 0.
75.
Now here double exclamationpoint.
Plan the closing.
The closing should be planned atthe onset of the loan for
foreign national borrowers.
You discussed, are you coming tothe U.
(12:51):
S.
to sign?
Are you signing in an embassy orconsulate over there?
Are we going to use remoteonline notarization, right?
So you should, this, this shouldbe planned in the beginning, but
please at least two weeks beforeyou're planning and closing and
depending on the, the method of.
Actual closing, you may needmore advance notice now.
(13:15):
Like I mentioned, the closingcan be in person in the good old
U.
S.
of A.
If it is going to be in person,keep note that if the borrower
resides in a non visa waivercountry, they're going to need a
visa to get into the U.
S.
That may take some time asconsulates and embassies are
ramping up other operationsafter being closed for a while
(13:36):
during the pandemic.
So reason I say that, A, to getthe visa or B, to get the
appointment to sign because youcan sign in a consulate or an
embassy outside the USA, so thenyou know you need to make that
appointment sometimes months inadvance.
Some countries it's only a weekor two weeks, but it still may
take a week or two weeks.
And if you think you, oh no,documents are gonna be their day
(13:58):
after tomorrow by DHL and yougotta sign and bring them back
an X number of days to fund thisthing, or else the seller may
not wanna wait.
You know, because closing meansclosing means the seller getting
the money.
So, these are all logisticalconsiderations that need to be
made.
I mentioned remote onlinenotarization, also referred to
as RON, Ron.
(14:21):
This definitely needs to becoordinated at the out, onset of
the application to confirm, A,that the conduit we're using for
the loan accepts it.
Right.
It says right there, it needs tobe approved by the investor or
lender funding.
The loan needs to becoordinated.
It needs to be approved by thetitle company.
This is the one that a lot ofpeople forget that what are the
(14:43):
title company underwriterdoesn't accept remote online
notarization.
We've had that where we acceptit.
Secondary accepts it.
Title company says we don'taccept it.
So, and then either get newtitle or figure out how you're
going to close this.
Without using remote onlinestation.
(15:04):
So, whatever method you use andthere may be other methods out
there that are proprietary tothat particular conduit's
closing and what's acceptable.
So, we could always plan it, butthat's the whole idea.
Plan the closing, right?
You don't want to get caught offguard thinking this is like a
regular deal.
(15:25):
So, excuse me.
All right, you got the clear toclose.
Let's clear quality control.
Let's send the wire to title andlet's close.
Right.
But your bar is sitting on theother side of the world,
probably in another time zone,possibly months away from
getting an appointment.
So, but there's again, now, forexample, we had, we do quite a
(15:48):
bit of business with Canada andin Canada, it's a little easier,
right?
I mean, we actually have sent.
Notaries to the Canadian borderor right to the other side where
the borrower doesn't live thatfar from the border.
So either the borrower can comemeet the notary or the notary
can go meet the borrower.
Right there.
Like for example, Buffalo, NewYork, right?
(16:09):
Niagara falls.
And then they can plan thisclosing and you know, they,
they've been able to do it thatway.
So now let me show you somesample documents, right?
Here we have we like to make itas easy as possible.
So here we have our sample bankand credit reference letters
that shows you the typicalinformation that will be needed.
(16:32):
Now, obviously this would haveto be put on letterhead.
This is just a sample of thetype of information we would
need.
Always needs to be in English ortranslated to English by a
certified translator.
Again, we do have options thatdo not require credit reference
letters.
Loan options, remember that.
And letterhead and reflectbusiness's telephone number and
(16:53):
address.
So this would be your samplebank slash credit reference
letter.
It could serve both purposes.
This is our sample CPA letterfor self employed borrowers,
right?
Gets on the similar to whatyou're going to need.
Needs to be from the countrywhere the income originates to
(17:14):
CPA.
We need this on the CPAletterhead accompanied by the
business license of the CPA andif not in English has to be
translated by a certifiedtranslator.
And then last but not least, oursample letter for income for a
salaried or hourly borrower.
(17:35):
Again, their employer has to bewhere they reside, definitely
outside the U.
S.
On company letterhead to reflectemployer's telephone number,
address, and website.
And translated to English, if inany other.
So, Foreign national loans,pretty basic you know,
(17:57):
documentation requirementsaren't that difficult.
What's more difficult islogistics and getting everything
in English.
Right.
So if you ask for the documentsin English, then you know what,
you will receive them hopefullyin English.
But if you just accept them inwhatever language they're in,
that's fine.
But then keep in mind, it'sgoing to have to be translated
(18:19):
by a certified translator thatcomes with a time and cost.
So that should be taken intoconsideration.
If that's, what's going tohappen in the loan.
Cost when it is being disclosed.
So you that's one of theconversations you want to have
with your borrower and then finda good translator or they're
going to have to find a goodtranslator in their country and
(18:39):
they'll have to provide thatcertified translation from their
native language to English.
(19:00):
All right, let's see.
I do see a question here.
We'll pull it up on the screenhere in just a second.
So the question is, do we have alist of title companies that
accept remote online notary?
We don't specifically have alist of title companies because
(19:23):
those would be the underwriters.
So I would just state that bringthat up with all of your
transaction partners, you know,because a lot of times the real
estate agents, like the seller'sagents depending on the market
the seller would designate.
The title company and theclosing agent and they may
they're not necessarily takinginto consideration that your
(19:44):
borrower could be a foreignnational borrower.
So that's something where.
You would want to reach out tothe title company.
Now we, we know with ourpartners that we use for the
four national loans.
We know that pretty much most ofthem will allow remote online
notarization, you just got tobring it up early in the
(20:05):
process.
So that all the boxes could getchecked off on.
It's really more the titlecompanies that you have to be
careful with because they theunderwriter or whatever, whoever
they use, whether they use firstAmerican as a title as an
underwriter or Chicago title, ormaybe it's an attorney and they
use attorneys title insurancefund, whoever there's many title
(20:29):
underwriters out there.
Old Republic is another companyand they all may have their own
requirements.
We had one where same borrower,Two separate properties.
She was buying two propertiessimultaneous.
We did the loans on both ofthem.
Separate sellers, differenttitle companies.
(20:49):
One accepted remote onlinenotarization.
The other one at the last minutesaid, Hey, you know, we thought,
but no, sorry.
So.
Luckily, she was from a countrythat she was able to secure an
appointment fairly quickly atthe embassy.
And she was a great borrower asthey usually most are and jumped
on it.
But I mean, in some countriesthat appointment could be months
(21:13):
away or far away.
Well, Oh yes.
All right.
Six, seven, 800 miles away.
One of our, one of our guys wasin a remote area and had to
apply eight hours to hisappointment.
Because they did, again, onewith remote, one couldn't be.
Difference was an eight hourflight in multiple days.
(21:33):
It does make a big difference.
Let's talk for a second though,Jose, about why.
So remember the reason why wecan't do remote online notary
and why we have to do it at anembassy is because we have to
prove their identity, right?
So remember the title companystill has to ensure and verify
that they verify the U S PatriotAct, right?
(21:54):
That they verify that this isnot someone that's on these
lists and the money is going tothis person.
And this person is this person.
Which, in the U.
S., it's very easy for anynotary to use any U.
S.
I.
D.
to verify the identity to U.
S.
standards to then fulfill thePatriot Act and stuff like that,
right?
(22:14):
But online, guess what?
We can't do that.
And online, there's a lot ofremote online notaries that can
easily verify a United Statespassport or United States I.
D.
for a United States remoteonline notary session.
That's not the same thing asverifying a foreign passport for
a remote online notary sessionor same thing they're doing in
(22:35):
the embassies, right?
They're not coming in theembassy with a U.
S.
passport because they don't haveone, right?
They're not a citizen.
They're coming in with someother country's passport and
there's special people therewith specialized training that
then verifies those documentsthat that person is that person,
which is very hard to do online.
And as you can think about it,right, 195 countries or whatever
(22:55):
there is, right, with differentpassports.
How could you do that all onlinein a system?
It's very difficult.
So there's a reason for this.
It's not us being difficult.
It's not the underwriters beingdifficult.
It is difficult to verifydocuments to U.
S.
standards without being in theU.
S.
Right.
So.
That's also why Jose mentionedwe sent notaries to the border,
but they can't go over theborder, right?
(23:17):
They can meet you at the border,you can come over to the U.
S.
side, sign everything on the U.
S.
side, right?
But you can't verify to U.
S.
standards once you step one footover that line, correct, Jose?
Yep, yep.
We send them to Buffalo, NewYork, and they come from Niagara
Falls, you know, and sign.
Or wherever they may be, that'sjust an example of what popular,
very popular border crossing youToronto area.
(23:42):
And I actually have one slidemore that I wanted to share.
I thought I was done, but I hadone slide.
It's just highlighting fornational bar borrower activity.
In the United States, right?
So I just wanted to share thishere because of for our animals
out there here, we're looking atthe top six countries, right?
(24:04):
You're looking at Canada with 11percent Mexico.
8 percent obviously, those arepretty obvious, right?
They're like right on ourborders, north and south.
But then you have China with 6%,India 5%, Brazil was 3%, and
Colombia coming on strong therewas 3%.
And then top destinations,Florida with 24%, California
(24:27):
with 11%, Texas 8, Arizona 7,New York 4, and North Carolina
4, right?
So that's that gives you someidea of marketing strategies if
you're trying to get foreignnational borrowers or if you're
working in those states, beready for the foreign national
borrowers that you're likely toencounter.
(24:48):
If you're licensed in any ofthose states, more than reason
to be on these trainings, seethe basics and then you know,
reach out for additionalguidance.
Once you do have the fornational.
All right, great.
Well, I don't see any otherquestions, so I think we'll go
ahead and wrap it up then.
Remember, we do this everyTuesday, Wednesday and Thursday
(25:10):
at 7 PM Eastern.
So we will be back tomorrow witha new topic.
We appreciate everybody tuningin.
We'll see you tomorrow.
7 PM Eastern for the nextepisode of the loan officer
training series.
With the mortgage calculator.
Take care everyone.
Thanks everybody.
Have a good night.
So welcome everyone.
My name is Kyle Hiersche.
I am the COO of the mortgagecalculator joined here by our
president, Nick Hiersche, andour sales manager, Jose
Gonzalez.
We are a lender that specializesin non QM loans and what we're
going to talk what we do everyTuesday, Wednesday, and now
Thursday evening at 7 p.
m.
Eastern is go through a in depthloan officer training and a
(00:38):
different topic and tonight'stopic is going to be how to
structure foreign nationalborrower loans, which is
something that we specialize in.
At here at the mortgagecalculator.
So I'm gonna go ahead and turnit over to Jose, our sales
manager with 28 years ofexperience as both a loan
officer and a realtor in SouthFlorida.
So obviously has a lot offoreign national experience on
(00:58):
both sides of the transaction.
So.
Jose, let's go ahead and getinto it.
How's everybody doing thisevening?
Oh, absolutely.
Foreign national borrower loans.
You gotta love them, especiallyif you are in South Florida,
which is the Mecca for mostforeign national borrowers,
Florida in general, the numberone for national borrower.
(01:23):
State.
So we will share someinteresting information with you
all at the end of thepresentation.
But let's get into how tostructure a foreign national
borrower loan.
So what exactly is a foreignnational borrower?
(01:44):
Right?
I mean, we always get asked thisquestion every now and then,
especially Because we have somany different borrower
classifications.
We have our foreign nationalborrowers.
We have our ITIN borrowers.
We have our non permanentresident alien borrowers and
resident aliens and borrowers.
(02:05):
So what exactly is a foreignnational borrower where they
would be, I guess, at the bottomof that totem pole in reference
to status and the U S becausethey don't have any status in
the U S they are a foreignnational borrower.
They are a citizen of anothercountry.
Now we do have an exceptionpossible for dual citizens, you
(02:27):
know, us citizens.
And a citizen of another countrywhere this borrower derives
their income and permanentlyresides outside the U S and has
done so for the majority oftheir life, they just may be
having to be born here.
And then grew up and livesomewhere else and have
established their whole life.
We do have an option for that,but nine times out of 10,
(02:48):
they're going to be a citizen ofanother country and they are
looking to buy either a secondhome or an investment property
here in the U.
S.
Never be a primary residencehere.
For national borrowers, nocredit score required, but.
If they do have credit, then theminimum credit score and trade
(03:12):
line requirements per theguideline for the program that
you're reviewing will apply.
Not all visa types areacceptable either.
Keep an eye out on diplomaticimmunity visas.
They're not acceptable.
If a borrower has a diplomaticvisa, they're not going to be
able to fund the loan for thembecause due to the fact of their
(03:35):
visa type.
They cannot no legal action canbe taken against them, so they
should not, they should not beable to foreclose.
Hence, borrower with diplomaticvisas are not acceptable.
The foreign national borrowercan never derive any of their
income in the USA for a foreignnational loan, right?
(03:58):
If they are actually derivingincome in the U.
S.
Like borrowers that have an E 2visa, right, the E 2 investor
visa, which allows them tolegally work here while they are
managing and running theirbusiness is the purpose of the E
2 visa.
Then that borrower could applyas a non permanent resident
(04:21):
alien as long as they meet theother requirements of having U.
S.
based credit, right?
If you have the income for theprogram type.
Usually it's if it's full doc,you would need to, you know,
like two years a year, dependingon what the program type is.
As long as you have the incomeand you have the visa type that
allows you to work here and thecredit, you could be a non
permanent resident alien.
(04:43):
Other than that, you're going tobe a foreign national, not an
ITIN borrower either, becausethe ITIN borrowers live here in
the U.
S.
permanently.
They work here.
They have U.
S.
based credit.
They just don't have status yet,but that it's not a foreign
national borrower.
Now obviously we have DSCR fornational loans.
We'll get into those details ina minute.
(05:04):
They don't require any incomeverification in any place for
the borrower.
Now to note here for MLOstructuring the deals, if the
borrower, borrower, excuse me,does not have any U.
S.
based credit, Then the loans aretypically priced with a 680,
680, 680 credit score whenyou're pricing it out so that
(05:30):
you get viable option.
There may be exceptions to thistypically it's going to be a
680.
So what are the eligibletransactions?
Well, there are four nationaltransactions eligible for
purchase and rate and termpurchases typically up to max 75
percent LTV, same for the rateand term.
Cat, we have cash out refioptions up to 70 percent LTV for
(05:55):
the for national borrowers.
Now we, now I break it down intoa couple of different
categories, basically astreamlined option.
For both full doc and DSCR and anon streamlined option.
Why do I have that?
Because we have multipleconduits for foreign national
loans.
Some in the streamlined,streamlined option depending on
(06:19):
if it's full doc or not, theborrower will not have to
provide credit referenceletters.
nor any type of bank referenceletter.
If it's full doc, they're goingto have to provide their CPA
employer letter, but they alsodo not have to provide a valid
visa on their passport if it'san investment property and
(06:40):
they're not signing into USA.
So what makes the streamlinedoption for full duct streamlined
is then no visa required if it'san investment property and
they're not signing in the USAand no bank and credit reference
letter needed either.
You only need to verify theemployment income depending on
(07:00):
the employment type.
So If it's a full doc nonstreamline option as some of the
conduits then will ask you for avisa, valid visa, regardless of
if they're signing or not in theUS, and they will also ask for
bank reference letters and orcredit reference letters,
anywhere from one or two.
Right?
So that's a difference, littledifference in pricing as well.
(07:23):
But this is, these arelogistical situations that can
happen.
That you have to discuss withyour borrowers regarding
procurement of certaindocuments.
They may not be where they canget them.
I say logistical, right?
So we do have the streamlinedoption and the non streamlined
option for ProDUCT.
(07:44):
Now if it's DSCR becomes alittle simpler because then on
the DSCR, streamlined option,not only is a borrower not
required to provide creditreference or bank reference
letter, they're also notrequired to provide any type of
income verification letter,obviously it's DSCR, or any kind
of CPA letter letter.
to verify residency expenses oranything like that.
(08:06):
Very super streamlined optionthere.
The non streamlined option onthe DSCR may require a CPA
letter to verify primary housingexpense, and a credit reference
letter will be required.
So, keep that in mind when youare pricing out your options.
Provide all options to yourborrowers, that's a good way to
(08:27):
provide it.
Here's a DSCR Streamlined optionand here's a DSCR Non
Streamlined option explaining tothem what, which is which, and
then the borrower may say, youknow what, I can't, these
documents here may present anissue for me right now.
So, sometimes it's, you know, alittle bit higher in the rate,
but it resolves the situation ofthe objective closing of the
(08:48):
property.
So, We talk about the full docloan.
As I mentioned there first,Billy point, I'd love to point
out stream line doc option doesnot require credit reference
letters, but if it's not thestreamlined option, you will
need credit reference letters,typically 43 percent DTI
(09:09):
manually underwritten selfemployed borrowers.
We would need a CPA letter fromthe country where the income
originates cannot be the U S.
And I'll show you sample lettersin a bit.
Salary to hourly employee wouldbe a verification letter
completed and signed by theiremployer.
We also have samples in aminute.
Now, depending on the option, Idid mention that we may require
(09:32):
two credit reference lettersfrom creditors in the country
where they permanently reside.
A resume of business experiencemay be required.
Now this does allow for partialoccupancy by the borrower
combined with short term rentalsince we do have full dock and
(09:53):
personal or entity ownership isallowed because on the full dock
you could have a second home.
We're not talking about, youknow, it's not always
investment.
I did state we could have asecond home or an investment
property.
So it could be personal orentity ownership is allowed.
Entity ownership, highlyrecommended.
And most likely on theinvestment property would be a
(10:15):
requirement.
So here, these are full docdocumentation requirements.
Keep an eye on the CPA letter,right?
For the self employed.
Now, what about our DSCR optionsfor foreign national?
Well, again, I like to state thestreamlined option does not
require credit, creditreference, nor a CPA letter.
(10:39):
No DTI on that one.
Sorry about the typo.
is manually underwritten loan.
Again, depending on whichoption, because it's, if it's a
non streamlined option for DSCO,we are going to require the two
credit reference letters fromthe country.
in the country where theypermanently reside.
Now, keep in mind the DSCRoption does not allow any
(11:01):
occupancy by the borrowers bythe borrower nor by the
borrower's family, right?
So, that's super important tonote there.
Hold on one second.
Notice I just corrected the typothere.
Eliminated the reference to DTIon my slide there.
(11:25):
So again, does not allow anyoccupancy by the borrower, nor
family, nor friends, right?
This is a pure investment onlyoption.
The DSCR option, since it is apure investment only option, if
you have your passport but don'thave your current US visa,
because you're waiting sixmonths to get that appointment
at the consulate.
That's why I stress the benefitof the streamline option for
(11:48):
investment properties, becauseif they don't have to come
permanent to sign in person,then that option will not
require them to have a visa ontheir passport if they reside in
a non visa waiver country.
And then real importantly there,we do have no ratio and low
ratio DSCR options when the DSCRis 0.
(12:09):
75 to 0.
99 and when the DSCR is lessthan 0.
75, we actually do have thoseoptions for foreign national
borrowers.
That's not very common outthere.
99.
9 percent of the foreignnational loans out there on the
DSCR loan option are going torequire 1.
0 minimum plus.
(12:29):
We have options going 0.
75 to 0.
99 and below 0.
75.
Now here double exclamationpoint.
Plan the closing.
The closing should be planned atthe onset of the loan for
foreign national borrowers.
You discussed, are you coming tothe U.
(12:51):
S.
to sign?
Are you signing in an embassy orconsulate over there?
Are we going to use remoteonline notarization, right?
So you should, this, this shouldbe planned in the beginning, but
please at least two weeks beforeyou're planning and closing and
depending on the, the method of.
Actual closing, you may needmore advance notice now.
(13:15):
Like I mentioned, the closingcan be in person in the good old
U.
S.
of A.
If it is going to be in person,keep note that if the borrower
resides in a non visa waivercountry, they're going to need a
visa to get into the U.
S.
That may take some time asconsulates and embassies are
ramping up other operationsafter being closed for a while
(13:36):
during the pandemic.
So reason I say that, A, to getthe visa or B, to get the
appointment to sign because youcan sign in a consulate or an
embassy outside the USA, so thenyou know you need to make that
appointment sometimes months inadvance.
Some countries it's only a weekor two weeks, but it still may
take a week or two weeks.
And if you think you, oh no,documents are gonna be their day
(13:58):
after tomorrow by DHL and yougotta sign and bring them back
an X number of days to fund thisthing, or else the seller may
not wanna wait.
You know, because closing meansclosing means the seller getting
the money.
So, these are all logisticalconsiderations that need to be
made.
I mentioned remote onlinenotarization, also referred to
as RON, Ron.
(14:21):
This definitely needs to becoordinated at the out, onset of
the application to confirm, A,that the conduit we're using for
the loan accepts it.
Right.
It says right there, it needs tobe approved by the investor or
lender funding.
The loan needs to becoordinated.
It needs to be approved by thetitle company.
This is the one that a lot ofpeople forget that what are the
(14:43):
title company underwriterdoesn't accept remote online
notarization.
We've had that where we acceptit.
Secondary accepts it.
Title company says we don'taccept it.
So, and then either get newtitle or figure out how you're
going to close this.
Without using remote onlinestation.
(15:04):
So, whatever method you use andthere may be other methods out
there that are proprietary tothat particular conduit's
closing and what's acceptable.
So, we could always plan it, butthat's the whole idea.
Plan the closing, right?
You don't want to get caught offguard thinking this is like a
regular deal.
(15:25):
So, excuse me.
All right, you got the clear toclose.
Let's clear quality control.
Let's send the wire to title andlet's close.
Right.
But your bar is sitting on theother side of the world,
probably in another time zone,possibly months away from
getting an appointment.
So, but there's again, now, forexample, we had, we do quite a
(15:48):
bit of business with Canada andin Canada, it's a little easier,
right?
I mean, we actually have sent.
Notaries to the Canadian borderor right to the other side where
the borrower doesn't live thatfar from the border.
So either the borrower can comemeet the notary or the notary
can go meet the borrower.
Right there.
Like for example, Buffalo, NewYork, right?
(16:09):
Niagara falls.
And then they can plan thisclosing and you know, they,
they've been able to do it thatway.
So now let me show you somesample documents, right?
Here we have we like to make itas easy as possible.
So here we have our sample bankand credit reference letters
that shows you the typicalinformation that will be needed.
(16:32):
Now, obviously this would haveto be put on letterhead.
This is just a sample of thetype of information we would
need.
Always needs to be in English ortranslated to English by a
certified translator.
Again, we do have options thatdo not require credit reference
letters.
Loan options, remember that.
And letterhead and reflectbusiness's telephone number and
(16:53):
address.
So this would be your samplebank slash credit reference
letter.
It could serve both purposes.
This is our sample CPA letterfor self employed borrowers,
right?
Gets on the similar to whatyou're going to need.
Needs to be from the countrywhere the income originates to
(17:14):
CPA.
We need this on the CPAletterhead accompanied by the
business license of the CPA andif not in English has to be
translated by a certifiedtranslator.
And then last but not least, oursample letter for income for a
salaried or hourly borrower.
(17:35):
Again, their employer has to bewhere they reside, definitely
outside the U.
S.
On company letterhead to reflectemployer's telephone number,
address, and website.
And translated to English, if inany other.
So, Foreign national loans,pretty basic you know,
(17:57):
documentation requirementsaren't that difficult.
What's more difficult islogistics and getting everything
in English.
Right.
So if you ask for the documentsin English, then you know what,
you will receive them hopefullyin English.
But if you just accept them inwhatever language they're in,
that's fine.
But then keep in mind, it'sgoing to have to be translated
(18:19):
by a certified translator thatcomes with a time and cost.
So that should be taken intoconsideration.
If that's, what's going tohappen in the loan.
Cost when it is being disclosed.
So you that's one of theconversations you want to have
with your borrower and then finda good translator or they're
going to have to find a goodtranslator in their country and
(18:39):
they'll have to provide thatcertified translation from their
native language to English.
(19:00):
All right, let's see.
I do see a question here.
We'll pull it up on the screenhere in just a second.
So the question is, do we have alist of title companies that
accept remote online notary?
We don't specifically have alist of title companies because
(19:23):
those would be the underwriters.
So I would just state that bringthat up with all of your
transaction partners, you know,because a lot of times the real
estate agents, like the seller'sagents depending on the market
the seller would designate.
The title company and theclosing agent and they may
they're not necessarily takinginto consideration that your
(19:44):
borrower could be a foreignnational borrower.
So that's something where.
You would want to reach out tothe title company.
Now we, we know with ourpartners that we use for the
four national loans.
We know that pretty much most ofthem will allow remote online
notarization, you just got tobring it up early in the
(20:05):
process.
So that all the boxes could getchecked off on.
It's really more the titlecompanies that you have to be
careful with because they theunderwriter or whatever, whoever
they use, whether they use firstAmerican as a title as an
underwriter or Chicago title, ormaybe it's an attorney and they
use attorneys title insurancefund, whoever there's many title
(20:29):
underwriters out there.
Old Republic is another companyand they all may have their own
requirements.
We had one where same borrower,Two separate properties.
She was buying two propertiessimultaneous.
We did the loans on both ofthem.
Separate sellers, differenttitle companies.
(20:49):
One accepted remote onlinenotarization.
The other one at the last minutesaid, Hey, you know, we thought,
but no, sorry.
So.
Luckily, she was from a countrythat she was able to secure an
appointment fairly quickly atthe embassy.
And she was a great borrower asthey usually most are and jumped
on it.
But I mean, in some countriesthat appointment could be months
(21:13):
away or far away.
Well, Oh yes.
All right.
Six, seven, 800 miles away.
One of our, one of our guys wasin a remote area and had to
apply eight hours to hisappointment.
Because they did, again, onewith remote, one couldn't be.
Difference was an eight hourflight in multiple days.
(21:33):
It does make a big difference.
Let's talk for a second though,Jose, about why.
So remember the reason why wecan't do remote online notary
and why we have to do it at anembassy is because we have to
prove their identity, right?
So remember the title companystill has to ensure and verify
that they verify the U S PatriotAct, right?
(21:54):
That they verify that this isnot someone that's on these
lists and the money is going tothis person.
And this person is this person.
Which, in the U.
S., it's very easy for anynotary to use any U.
S.
I.
D.
to verify the identity to U.
S.
standards to then fulfill thePatriot Act and stuff like that,
right?
(22:14):
But online, guess what?
We can't do that.
And online, there's a lot ofremote online notaries that can
easily verify a United Statespassport or United States I.
D.
for a United States remoteonline notary session.
That's not the same thing asverifying a foreign passport for
a remote online notary sessionor same thing they're doing in
(22:35):
the embassies, right?
They're not coming in theembassy with a U.
S.
passport because they don't haveone, right?
They're not a citizen.
They're coming in with someother country's passport and
there's special people therewith specialized training that
then verifies those documentsthat that person is that person,
which is very hard to do online.
And as you can think about it,right, 195 countries or whatever
(22:55):
there is, right, with differentpassports.
How could you do that all onlinein a system?
It's very difficult.
So there's a reason for this.
It's not us being difficult.
It's not the underwriters beingdifficult.
It is difficult to verifydocuments to U.
S.
standards without being in theU.
S.
Right.
So.
That's also why Jose mentionedwe sent notaries to the border,
but they can't go over theborder, right?
(23:17):
They can meet you at the border,you can come over to the U.
S.
side, sign everything on the U.
S.
side, right?
But you can't verify to U.
S.
standards once you step one footover that line, correct, Jose?
Yep, yep.
We send them to Buffalo, NewYork, and they come from Niagara
Falls, you know, and sign.
Or wherever they may be, that'sjust an example of what popular,
very popular border crossing youToronto area.
(23:42):
And I actually have one slidemore that I wanted to share.
I thought I was done, but I hadone slide.
It's just highlighting fornational bar borrower activity.
In the United States, right?
So I just wanted to share thishere because of for our animals
out there here, we're looking atthe top six countries, right?
(24:04):
You're looking at Canada with 11percent Mexico.
8 percent obviously, those arepretty obvious, right?
They're like right on ourborders, north and south.
But then you have China with 6%,India 5%, Brazil was 3%, and
Colombia coming on strong therewas 3%.
And then top destinations,Florida with 24%, California
(24:27):
with 11%, Texas 8, Arizona 7,New York 4, and North Carolina
4, right?
So that's that gives you someidea of marketing strategies if
you're trying to get foreignnational borrowers or if you're
working in those states, beready for the foreign national
borrowers that you're likely toencounter.
(24:48):
If you're licensed in any ofthose states, more than reason
to be on these trainings, seethe basics and then you know,
reach out for additionalguidance.
Once you do have the fornational.
All right, great.
Well, I don't see any otherquestions, so I think we'll go
ahead and wrap it up then.
Remember, we do this everyTuesday, Wednesday and Thursday
(25:10):
at 7 PM Eastern.
So we will be back tomorrow witha new topic.
We appreciate everybody tuningin.
We'll see you tomorrow.
7 PM Eastern for the nextepisode of the loan officer
training series.
With the mortgage calculator.
Take care everyone.
Thanks everybody.
Have a good night.
Popular Podcasts
Dateline NBC
Current and classic episodes, featuring compelling true-crime mysteries, powerful documentaries and in-depth investigations. Follow now to get the latest episodes of Dateline NBC completely free, or subscribe to Dateline Premium for ad-free listening and exclusive bonus content: DatelinePremium.com
Stuff You Should Know
If you've ever wanted to know about champagne, satanism, the Stonewall Uprising, chaos theory, LSD, El Nino, true crime and Rosa Parks, then look no further. Josh and Chuck have you covered.
The Breakfast Club
The World's Most Dangerous Morning Show, The Breakfast Club, With DJ Envy, Jess Hilarious, And Charlamagne Tha God!