December 30, 2024 • 28 mins
In this episode, mortgage industry veteran Keith Goeringer sits down with Mark Leusner from Change Wholesale to explore innovative non-QM lending solutions.
Mark shares insights into Change Wholesale's unique programs that can help qualify borrowers who fall outside of traditional mortgage guidelines. Learn about alternative documentation methods using bank statements, one-year tax returns, and even no-income-required options.
Discover how products like DSCR (Debt Service Coverage Ratio) loans and the CDFI (Community Development Financial Institution) program can provide competitive advantages for your clients. Keith and Mark dive deep into the details of these specialized lending products and discuss how they can unlock homeownership for a wider range of borrowers.
If you're looking to expand your toolkit and better serve clients with non-traditional income or credit profiles, this episode is a must-listen. Gain the knowledge and confidence to explore alternative lending solutions that can make the dream of homeownership a reality.
Schedule your free consultation- http://schedulewithkeithgo.com
Send me a message - keith@keithgo.com
Mark as Played
Transcript
Episode Transcript
Available transcripts are automatically generated. Complete accuracy is not guaranteed.
Keith Goeringer (00:01):
Keith, welcome to the yes, you can buy a home.
Podcast, my name's KeithGoeringer, and for the past 23
years, I've helped 1000s and1000s of people buy homes
through mortgage and realestate. In this podcast, you're
going to get expert tips,tricks, everything you need to
buy a home and make it supereasy. We want you to buy the
home of your dreams. And yes,you can buy a home, Keith. Okay,
(00:23):
I am so excited today. I've beenlooking forward to this all week
long. I'm telling you, I haveMark Leusner here from change
wholesale. And just to give youa little bit of background, I
have been in the mortgageindustry for 23 years, been
through subprime up and down,the mortgage crash, everything.
And when I find new productsthat are exciting, I get
(00:47):
exciting the fact that you markyou actually have some new
products that are I thinkthey're really unique to what's
going on in the market rightnow. And I wanted to bring you
on and explain what they are,and have you explain what the
benefits are to my listeners, ofhow it's going to help them. You
know what? I mean,
Mark (01:08):
absolutely. And thanks for having me on, Keith, yeah.
Keith Goeringer (01:15):
So tell me a little bit about just give me a
rough overview of the differentproducts that you have, and
we'll go deep as we'll go alittle bit deeper into them
also.
Mark (01:26):
Yeah, absolutely. So again, thanks for having me on
and hey, you got me beat for 23years. I have 22 years in the
industry, but I am excited.
Keith Goeringer (01:34):
We're gluttons for punishment, aren't we? I
want to keep the excitementgoing.
Mark (01:38):
I get it's a holiday week, and we can keep this compressed,
but I have a lot of greatnuggets and a lot of value adds
for your partners, great,because we have a lot of
distinction outside of the boxbeing solely a cute, non QM
product guy, and we have somereally strong niches that we can
touch on. Okay, so what we'relooking for is anybody in the
(02:03):
clientele space that fallsoutside of the scope of Fannie
Mae, in essence, non QM, okay,so I have a lot of non
traditional methods to qualifyyour clients. I have a lot of
all doc alternative options toqualify clients. Specifically, I
can get into incomequalifications from an alt doc.
(02:24):
You're not running an A US or adu, this is truly non Q web. We
look at other items such asreserves and or assets, okay,
and LTVs, again, we could touchon a lot of those programs
specifically in the alt doc.
Keith and please, we can keepthis in any direction you want
to go to qualify anybody selfemployed that should immediately
trigger your bells and say, Hey,most likely that applicant self
(02:48):
employed. And there's facts outthere. How many people are self
employed per state? And thenmost likely you got to qualify
from an alternative doc, such asbank statements. Why? Most
likely, they're probablycreative on their tax returns,
right? They're self employed fora reason. So from a alt doc
perspective, I can qualify 12month bank statements using 100%
(03:10):
gross deposits on personalThat's right. All
Keith Goeringer (03:18):
right. Let me stop you there, because a lot of
the a lot of the listeners don'tunderstand, like, how
revolutionary that is. So, justso everybody knows, when you do
a bank statement program inalmost every lender, there is a
percentage of those depositsthat you can use, and it's
(03:38):
usually based on what kind ofline of work the person is. I
had one and they sold. These arefigurines or something, about a
year ago. I remember we sent inall the bank statements, and I
was going to be able to use 45%of all the deposits. Now, 45% of
(03:58):
all the deposits sometimes willjust not create a loan, right?
So the fact that your companygoes to 100% I think, is very
unique for the marketplace. Iwanted to make sure everybody
had some context on that,
Mark (04:14):
yeah, bank statements, it's an alternative
documentation to qualify theclient. You're not looking for a
two year normal Fannie Maeagency tax return. You're
looking at cash flow and bankstatements. So if this
individual has extra cash flowsand or a side hustle on this
side, we're using 100% grossdeposits that's on personal
(04:35):
statements only 12 months toqualify for income that's on
your loan at you're not runninga US, it's just an income
calculation. You also havebusiness funds or business
statements. You can use 12months there. But then there's
an expense factor ratio, as youmentioned, 45 where we can go up
to 75 potentially on somebuckets or programs, meaning
(04:56):
using 75% of gross deposits onbusiness. Can also commingle
different bank statements. Ifthere's additional earnings
coming in, you can also add onadditional income streams, such
as client has bank statementssay he works at Starbucks, a w2
job, say he goes home and he hasa nightly side hustle, maybe
(05:18):
he's selling stuff on eBay orUber driving or something else
from a cash flow position. Firstof all, you're using 100% gross
deposits on that individual. Andthen you can also add on an
asset assist. What's that mean?
If they have a high net worth,you can use it as a depletion so
like a 401 K or stocks or bondsor mutual funds. So you can
(05:38):
commingle income to qualify foryour client.
Unknown (05:45):
And commingle is
Keith Goeringer (05:46):
just a fancy word for mixed Okay, so the word
from mixed together, right?
Okay, cool, correct. So
Mark (05:54):
the point is, I'm trying to get your mind turning and
your fan base client, anybodywith a challenging position to
support income from a normalagency, tax return
qualification. I also have a oneyear tax return qualification,
if they did file last year'sreturns. We can use a one year
(06:15):
of income to qualify, or a 1099such as a one year 1099 and or
listen to this one, Keith hadone year. W2 somebody now that
we're merging into next year,but hypothetically, say if they
had a hot, strong 2023,earnings. W2 Yeah, maybe a lot
(06:36):
of overtime, maybe a lot ofextra commission or bonus
earnings. We do not require apay stub to support that year to
date earnings. That's right. Sothink about that one year w2
last year to qualify no paystub, we're only doing a verbal
verification, so we're justdoing a w2 divide by 12 for a
monthly income. So that's agreat approach. It's an
(06:59):
additional nugget. I want togive you a competitive advantage
that other clients don't have.
It's not a two year blendedincome on a w2 approach, like
agency on non QF.
Keith Goeringer (07:12):
Except that's amazing. I had a gentleman,
literally today, that he He's1099, through five different
healthcare agencies, and then healso runs a podcast, like we're
on here now on the side. Andthat podcast, he makes money
from bringing people on. Hemakes money from basically
(07:35):
running ads on his podcast. Soyou put all that together, it's
3040, grand a month. But itdoesn't look that way on paper,
right when we look at from aFannie Mae or a Freddie Mac
standpoint, and he's a greatexample of somebody that would
benefit from your your uniqueprograms as well. Okay, that's
(07:56):
really cool. Now, I really wantto go also into dfcr a little
bit, because I think thatthere's a big misconception
about DSCR, and people justdon't understand what it is. Can
you tell us, like, what is DSCR?
What does that actually mean?
When you hear that word DSCR?
What does that mean?
Mark (08:17):
DSCR stands for debt service credit ratio, and you're
using the market rentals fromthe subject property to, in
essence, carry the cash flow ordebt service to cover the
mortgage payment.
Unknown (08:29):
So
Mark (08:31):
any investment prop purchase you're looking for
market rentals that's done by anappraiser. It's an appraisal
schedule. It's called a 1007 fora single family and or a 1025,
for a multi family, I can do apurchase investor DSCR 80 loan
to value one to four units usingthe market rents. You're not
(08:55):
using income to qualify for thisapproach. This is a non QM FIX
IT strategy. And again, there'sno DTI, there's no a US, there's
no findings. A file is simple tooriginate, and it's a great
nugget for your clientele baseto utilize 80 loan to value four
(09:17):
units, and then the DSCR, howthat's formulated is you're
utilizing, again, the marketrents, and dividing that into
the proposed payment. We call ita p, i, t, i plus a meaning, if
it's a condo with anassociation, basically full nut
of the pay, if it deposited cashflow. It's called one to one and
(09:38):
or greater than 100%
Unknown (09:40):
That's great from a standpoint,
Mark (09:43):
from a program matrix we allowed down 2.75 meaning that
property is going to have anegative cash flow, potentially.
Keith Goeringer (09:52):
Note too, before you go on, we should note
that most lenders will be a oneto one ratio. That's what I.
Paint so the back mature goingdown a little bit below the one
to one. We have one right nowthat we're working on like that,
and we were looking at it, andwe hit that. We knew we were
going to come in a little bitbelow one to one. It wasn't
(10:14):
much. It was like 6070, bucks.
But I was like, Oh my gosh,we're in trouble. And that's
when I reached out to you, andyou were like, No, man, we've
got something to take care of,which is amazing, because, like
I said, most lenders are lookingfor that one to one ratio, and
you're a little more aggressive,which I think is awesome,
Mark (10:31):
correct? So we have that additional we call it a bucket,
or opportunity for the client tofill that loan transaction. If
you're that tight, we canexplore other avenues, such as
qualifying the client on an IOpayment now call it an itty
instead of a pity, meaning nowthat payments going to be lower,
and see if we can increase thatdebt service to a potentially
(10:53):
above 110, and or a one and aquarter would be a sweet spot
for us, because then thatpricing bucket is going to
adjust,
Keith Goeringer (11:01):
and pity is pro interest, taxes, yeah, and
insurance. And what was theother one? You said
Mark (11:09):
Itty. I call it ID an IO, okay, you're qualifying that
mortgage payment into the debtservice as an itty, an IO,
meaning an interest only, taxesin insurance payments,
Keith Goeringer (11:21):
I see, okay, I didn't even know that was
possible. I just learnedsomething today too. That's
great. Okay, you qualify it,boss based off of off the
interest only payment. Okay,that is correct. Sorry. I just a
lot of people out there don'thave the 22 years of waking up
in the morning and doing thisevery day. They don't know what
some of that vernacular is,absolutely,
Mark (11:42):
I fully understand some another say prefix that I use.
It's called an air DNA. What isthat? This is great. It's for
anyone listen to this. It's onlypermitted on a purchase. Think
of it as like a Zillow gives youa value of what the property is
going to be, right? You plug inthe address, bedroom, bathroom,
count, air DNA is a hot,aggressive option. Or to qualify
(12:07):
to client on purchases, you plugin address, bedroom, bathroom,
count, and it's going to spitout a projected income over the
next 12 months for that subjectproperty. We could potentially
use that heat to qualify yourdebt service, even if it comes
in higher than the 1007 on themarket rental so again, this is
(12:30):
based on short term rentals forthis subject here DNA. This is a
great exit strategy, great valueadd for any Realtors listening
out there, it's calledrentalizer, and you and I can
plug and play in this and to seeif it can qualify, or to see if
we can pivot for your client. Sothe point of this is, there's
(12:50):
multiple options to qualifyclients. We have a lot of great
little buckets of opportunity.
It's just not your normalapproach. So that's what gives
me change a competitiveadvantage. And
Keith Goeringer (13:04):
most of these products are between what 70 and
80% loan to value, aren't they?
That
Mark (13:10):
is correct. My Max loan to value is 80 on investor. But
from a pivot, we can alsoqualify, if you're on investing,
investor as a subject property,we can pivot to an alt doc
option. Alt Doc is piggyback onan income stream approach, such
as personal bank statements thatwe talked about, 100% gross
(13:33):
deposit that client does notneed to be self employed. Now I
can get you an 85 loan to valuewith no MI, no mortgage
insurance for an investmentpurchase and or a larger loan
amount. So that would be a greatexit strategy, and that would be
a pivot again, going, maybe thew2 approach, maybe going that
bank statement approach, 1099,asset qualifier, asset
(13:58):
depletion. We didn't talk aboutthat one. That's a great option.
That's for somebody, say, with ahigh, big, large nest egg of
funds, anything from an assetinstrument of stocks, bonds,
mutual funds, 401, KS, whateverit is. We can use a depletion
method. You can use a divider by60. It's rather aggressive,
(14:20):
because industry and mycompetitors are going to divide
by 84 or 20, yeah,
Keith Goeringer (14:24):
that's absolutely right. That's the
Fannie Mae formula, absolutelyyeah. So
Mark (14:29):
think of me again. I'm giving you guys perimeter
product outside of that FannieMae box you have, so that
there's the pickup and there'sthe benefit from our guides and
matrixes that we can offer toyour clients. I
Keith Goeringer (14:42):
think we've also got to address the fact
that, because these loans are 70or 80% they're still pretty safe
for you guys. They're still avery good investment. I remember
when all that stuff happened, ina way, and I was thinking, the
reason that this happened was wewere doing these. Alternative
programs at 100% some of themwas 110% they're crazy. Now I
(15:07):
feel like they're much saferbecause they're lower loan to
values. Can you and can youspeak to that at all? Because
I'm sure everybody is listeningto this going, oh my gosh, we're
creating a we're creating thenext level of and we're not. And
I gotta tell you guys like Iwent through that whole thing,
right, and I still remember thebank statement loans themselves
(15:31):
performing extremely well, I'mtalking like, probably better
than some of the full doc loansback then, when I was at Fremont
and I prefer as well. Theyperformed extremely well on the
market. In my opinion, thereason most of that happened was
just pure stated loans and highLTVs of the stated loans.
Mark (15:54):
Yeah, this is a great pivot. So you're aging myself
too and but I was at some calledan old sub primer. So I work
with Lehman Brothers, and I havemany years doing some of these
programs. But these now non QMlook for additional assets.
Okay, additional reserves toqualify to mitigate our risk. So
these loans do perform, it's ahigher FICO bucket, and again,
(16:18):
reserves to mitigate the risk.
You're saying state, it state.
It's gone right? It was dating,quote, unquote, how much John
Smith works makes at the gasstation. That was a state. It
has an ATR. And this is a greatpivot to a strong one of our
value adds here, Keith, it'scalled Community. Why am I
(16:39):
saying community? Becausecommunity program, it's called
community does not have an ATR.
ATR, guys, means ability torepay. So this is a great pickup
for change, because in theindustry and out there, in the
non QM land in America doingwholesale, there's minimal
(17:00):
channels for exit strategieswith a no ATR, that's no ability
to repay,
Unknown (17:08):
not state it for a primary. So
Mark (17:12):
this should ring a bell in your video, because how do we do
that? And here's a value add.
It's called four letters. Mystory is I didn't know about
this until four years ago, andthat's why I took the position.
So I'm dating myself, but mylast run was a 13 year run doing
wholesale. I left that book ofbusiness because I didn't know
about a CDF communitydevelopment financial
(17:35):
institution. This is going togive you a value add for the
underserved, underbankedcommunity. This is big team.
CDFI stands again for communitydevelopment financial
institution. It's so big thatit's issued by the US Department
of Treasury, okay. Why is it sobig? Because it gives us
exemption. A CDFI is exempt, asyou mentioned before, ATR. ATR
(17:58):
is ability to repay. Okay, thisis part of the Dodd Frank Act
where we have exemption to ATRrealtors and fan base listening.
That means on your loanapplication that Keith cannot
can set up for you guys, no doc,no income, no income to qualify
(18:19):
or calculate it, and nothing isstated. There's that word, it's
almost like a curse word, butthere's nothing stated. Keith,
yeah, and there is no DTI tocalculate. So what we just
talked about is a nodocumentation, product that is
(18:40):
no employment stated, no incomerequired on a primary be
Keith Goeringer (18:50):
very similar.
If I walked into a bank and gota signature loan, right? I walk
into a bank I get a signatureloan, there's collateral, but
they're not really diving intowhat my income is, possibly
assets, but not what my incomeis, I think, and tell me if I'm
wrong, but it seems to me like,like you said, stated is the a
(19:11):
bad word. We're not statingincome. It is just flat. No
income required. There's no it'snot even looked at, right? That
Mark (19:23):
is correct. So again, how are we mitigating or the risk on
the file? First of all, comparedto the 2008 days, there's
nothing from a high loan tovalue bucket max on this program
is 75 Yes, it's for primarySecondly, we look at a FICO
minimum credit score for yourapplicant is a 680 and we do
(19:44):
want trade lines, meaning creditdepth on the applicant to
qualify, we look for two tradelines open and active for 12
months, or one reviewed for 24and or if they are a first time
home buyer, there's norestrictions. Dollars. But then
I can also use 12 months cancelrent checks in combination with
(20:04):
one Trade Month, the biggestpiece and the difference from,
let's just call it the 2008 2009days is we want more reserves,
reserves, meaning to mitigateour risk. We want the pity the
amount of the mortgage paymenttimes nine. If you're doing a 75
loan to value in the applicantsaccount, applicants accounts,
(20:27):
they can utilize any assetinstrument they have, stocks,
bonds, mutual funds, evenbusiness funds. That's nine
months 75 loan to value, theycan purchase a one to four unit.
Yes, you can get a gift for theother 25% down to structure your
loans, 75 loan to value. 25%potentially a gift, as long as
(20:52):
they have their reserves sourcedin season for 30 days six or
nine, and that's tiereddepending on your loan to value.
Now you're getting the Americandream, Keith, you're setting up
your clients and then gettingtheir primary residence loan
amounts currently up to $2million and again, this is a no
ATR loan, no dumb no doc on aprimary situation.
Keith Goeringer (21:16):
You figured this out four years ago. I
literally didn't know about thisuntil I talked to you about what
two weeks ago or so. I think Ihad no idea it even existed, and
that's my fault for not gettingout there and understanding the
programs I've been doing so manytype right VA conventional for
(21:39):
so long. I'm just glad we talk,because there's so much need for
this. Now I'm seeing this as Istart to talk to people and
realtors and things like that.
There is so much need for thisproduct, and it's really an
aggressive but still safeproduct. If, if you could put
those words together, I thinkyou can, these days, right? We
have an aggressive product, butis also a safe product. And I
(22:01):
think that's refreshing andpretty amazing, correct?
Mark (22:06):
Yeah, these loans do perform well. And again, they
have a Reserve Base, as yousaid, vanilla. Think of it as
the Fannie Mae box on theoutside of the perimeter
product. So yeah, great littlevalue add for your team, for
your realtor, base, for yourclientele. It's not for
everyone, but this is a greatsolution to a situation
(22:26):
otherwise the client can'treceive lending. So now you're
in that solution and basicallyfixing their problem and getting
them into the home. Okay, sogreat solution, great exit
strategy, great value, add team.
And
Keith Goeringer (22:42):
that's what I always loved, even back in the
bad days, right? I always likedthe fact that we could still
help people that other peoplewould not help, right? We could
still figure out a way, if youwant to become a homeowner, I'm
going to get out there and digand call and find a way for that
to happen. And that's reallythat's why we learned all these
(23:06):
things. There's this myth thatwe were all, everybody was on
the take and we were all tryingto do the wrong thing. That's
not what was really going on fora lot of us. We were just
looking other ways to helppeople get that American dream
of home ownership and and justtalking to other companies and
finding out what's out there,and that's exactly what I'm
(23:27):
doing right now. This isawesome. Have we missed anything
here? Anything else we need togo over? You think that's a
product that's worthy of talkingabout?
Mark (23:38):
Yeah. Again, there's a lot of good little niches in it. I
don't know how granular you wantto get, but I'm trying to
Keith Goeringer (23:45):
get. I don't know if my listeners get to stay
in that they're probably asleepby now,
Mark (23:52):
you and I, but think of me as that large toolbox and digest
all because we have a lot ofgreat little nuggets and a lot
of items that are just going tooutside of the normal vanilla,
as you said, that's the Briarsice cream, right? I'm the
chocolate chips. I have a lot ofnice little pivot points that we
can do options for, such asmaybe client with no trade
(24:14):
lines, maybe somebody withmortgage lates, maybe an
applicant qualifying with aduincome. Maybe they need a higher
expense factor on bankstatements. I have a written doe
program. I have propertieslisted. If they were listed
today on the market and theypulled it off tomorrow, they can
do a cash out. You can't do thatwith Fannie. It's a great term
(24:34):
only. So now that's thechocolate chip piece. I have a
lot of great little nontraditional methods. Hopefully
that's what comes across on thisconversation for your team to
pivot to explore options forlending part of the underbanked,
underserved community thatyou're given an exit strategy
to. So team, give Keith a call,and we can collaborate together
(24:57):
and come up with an approach tosee if they can qualify. Okay,
if they can't go from aalternative doc, we can also go
community doc, which is the nodoc. So there's a lot of great
value adds. Hopefully this waspositive. Keith and Oh,
Keith Goeringer (25:12):
I love it. It's been awesome. I have to tell you
a story. I was talking to arealtor. We were thinking about
working together yesterday, andwe were just talking about how
she had some deals that fell outand used to when you're busy.
Deals fall out because of,usually the lack of
communication or contact orsomething like that. Right now,
(25:34):
when you're not extremely busy,it's interesting. I'm finding
out that deals are found becausethe loan officer doesn't push or
try to figure out other ways toget the client to be able to
qualify, right? So the clientcomes to a loan officer, and
like you said, they're not usedto doing some of the programs
(25:56):
you have, and maybe the loanofficer doesn't even do what I
call a deep application, right?
So I think there's been thisinteresting just laziness in our
industry, where we send peopleto a website, and that person
fills out information on awebsite, and that application
comes back, and then we run thecredit, and from that we
(26:18):
determine if the loan can bedone as well as I do. Back in
the day, we didn't havewebsites, right? It was all
we're talking to that person onthe phone and handwriting the
application and learningabsolutely everything. I think
it's important for us to go backto that time, and if there are
loan officers listening, callthat client and go deep with
(26:40):
them as much as possible,because that's when you build a
real loan application, not offof a online application. Because
I can't find out these thingsand put them in the bucket of
what you do if I don't talk tothe client about absolutely
everything going on theirfinances and their assets, etc.
(27:01):
So I think it's important for usto really think about, like, who
people are working with when wedive into this stuff. But no,
this is dude. This is thank youso much for doing this and
spending your time. I don'tthink you guys get near enough
air time to tell us what'sreally going on in the
(27:25):
marketplace. I was thinking theother day. I was like, when was
the last time I heard anythinglike this on the internet at
all? It's told you this, butit's like, you guys don't really
have a voice, and I wanted togive you a voice as to how
unique some of your programsare.
Mark (27:44):
Yeah, I appreciate the voice in a phone call away, I
like to talk. I'm cold fashionas an AE, so I'm heavily getting
involved. And as you say, scrubthe client, really dissect what
they have going on. And let'ssee if we can pivot to an
alternative documentation toqualify your applicant. So it
really takes somebody seasonedlike you, Keith, with a long
(28:05):
mortgage career, to really drilldown, put on the gloves and go
to work and review what theyhave for options to qualify,
rather than just somebodyplugging and playing on an app
and online, as you say so, anyyellows out there. If you're
looking to learn
Unknown (28:22):
in this space, it's
Mark (28:25):
you got to think outside the box. It's creative lending,
and we have a lot of options. Iknow our rates are aggressive. I
know what I can do for service.
So hopefully you guys think ofme. Hopefully you had some
takeaways from this call.
Hopefully we can close moreloans.
Keith Goeringer (28:38):
Absolutely.
Thank you for your time Mark.
Keith, welcome to the yes, you can buy a home.
Podcast, my name's KeithGoeringer, and for the past 23
years, I've helped 1000s and1000s of people buy homes
through mortgage and realestate. In this podcast, you're
going to get expert tips,tricks, everything you need to
buy a home and make it supereasy. We want you to buy the
home of your dreams. And yes,you can buy a home, Keith. Okay,
(00:23):
I am so excited today. I've beenlooking forward to this all week
long. I'm telling you, I haveMark Leusner here from change
wholesale. And just to give youa little bit of background, I
have been in the mortgageindustry for 23 years, been
through subprime up and down,the mortgage crash, everything.
And when I find new productsthat are exciting, I get
(00:47):
exciting the fact that you markyou actually have some new
products that are I thinkthey're really unique to what's
going on in the market rightnow. And I wanted to bring you
on and explain what they are,and have you explain what the
benefits are to my listeners, ofhow it's going to help them. You
know what? I mean,
Mark (01:08):
absolutely. And thanks for having me on, Keith, yeah.
Keith Goeringer (01:15):
So tell me a little bit about just give me a
rough overview of the differentproducts that you have, and
we'll go deep as we'll go alittle bit deeper into them
also.
Mark (01:26):
Yeah, absolutely. So again, thanks for having me on
and hey, you got me beat for 23years. I have 22 years in the
industry, but I am excited.
Keith Goeringer (01:34):
We're gluttons for punishment, aren't we? I
want to keep the excitementgoing.
Mark (01:38):
I get it's a holiday week, and we can keep this compressed,
but I have a lot of greatnuggets and a lot of value adds
for your partners, great,because we have a lot of
distinction outside of the boxbeing solely a cute, non QM
product guy, and we have somereally strong niches that we can
touch on. Okay, so what we'relooking for is anybody in the
(02:03):
clientele space that fallsoutside of the scope of Fannie
Mae, in essence, non QM, okay,so I have a lot of non
traditional methods to qualifyyour clients. I have a lot of
all doc alternative options toqualify clients. Specifically, I
can get into incomequalifications from an alt doc.
(02:24):
You're not running an A US or adu, this is truly non Q web. We
look at other items such asreserves and or assets, okay,
and LTVs, again, we could touchon a lot of those programs
specifically in the alt doc.
Keith and please, we can keepthis in any direction you want
to go to qualify anybody selfemployed that should immediately
trigger your bells and say, Hey,most likely that applicant self
(02:48):
employed. And there's facts outthere. How many people are self
employed per state? And thenmost likely you got to qualify
from an alternative doc, such asbank statements. Why? Most
likely, they're probablycreative on their tax returns,
right? They're self employed fora reason. So from a alt doc
perspective, I can qualify 12month bank statements using 100%
(03:10):
gross deposits on personalThat's right. All
Keith Goeringer (03:18):
right. Let me stop you there, because a lot of
the a lot of the listeners don'tunderstand, like, how
revolutionary that is. So, justso everybody knows, when you do
a bank statement program inalmost every lender, there is a
percentage of those depositsthat you can use, and it's
(03:38):
usually based on what kind ofline of work the person is. I
had one and they sold. These arefigurines or something, about a
year ago. I remember we sent inall the bank statements, and I
was going to be able to use 45%of all the deposits. Now, 45% of
(03:58):
all the deposits sometimes willjust not create a loan, right?
So the fact that your companygoes to 100% I think, is very
unique for the marketplace. Iwanted to make sure everybody
had some context on that,
Mark (04:14):
yeah, bank statements, it's an alternative
documentation to qualify theclient. You're not looking for a
two year normal Fannie Maeagency tax return. You're
looking at cash flow and bankstatements. So if this
individual has extra cash flowsand or a side hustle on this
side, we're using 100% grossdeposits that's on personal
(04:35):
statements only 12 months toqualify for income that's on
your loan at you're not runninga US, it's just an income
calculation. You also havebusiness funds or business
statements. You can use 12months there. But then there's
an expense factor ratio, as youmentioned, 45 where we can go up
to 75 potentially on somebuckets or programs, meaning
(04:56):
using 75% of gross deposits onbusiness. Can also commingle
different bank statements. Ifthere's additional earnings
coming in, you can also add onadditional income streams, such
as client has bank statementssay he works at Starbucks, a w2
job, say he goes home and he hasa nightly side hustle, maybe
(05:18):
he's selling stuff on eBay orUber driving or something else
from a cash flow position. Firstof all, you're using 100% gross
deposits on that individual. Andthen you can also add on an
asset assist. What's that mean?
If they have a high net worth,you can use it as a depletion so
like a 401 K or stocks or bondsor mutual funds. So you can
(05:38):
commingle income to qualify foryour client.
Unknown (05:45):
And commingle is
Keith Goeringer (05:46):
just a fancy word for mixed Okay, so the word
from mixed together, right?
Okay, cool, correct. So
Mark (05:54):
the point is, I'm trying to get your mind turning and
your fan base client, anybodywith a challenging position to
support income from a normalagency, tax return
qualification. I also have a oneyear tax return qualification,
if they did file last year'sreturns. We can use a one year
(06:15):
of income to qualify, or a 1099such as a one year 1099 and or
listen to this one, Keith hadone year. W2 somebody now that
we're merging into next year,but hypothetically, say if they
had a hot, strong 2023,earnings. W2 Yeah, maybe a lot
(06:36):
of overtime, maybe a lot ofextra commission or bonus
earnings. We do not require apay stub to support that year to
date earnings. That's right. Sothink about that one year w2
last year to qualify no paystub, we're only doing a verbal
verification, so we're justdoing a w2 divide by 12 for a
monthly income. So that's agreat approach. It's an
(06:59):
additional nugget. I want togive you a competitive advantage
that other clients don't have.
It's not a two year blendedincome on a w2 approach, like
agency on non QF.
Keith Goeringer (07:12):
Except that's amazing. I had a gentleman,
literally today, that he He's1099, through five different
healthcare agencies, and then healso runs a podcast, like we're
on here now on the side. Andthat podcast, he makes money
from bringing people on. Hemakes money from basically
(07:35):
running ads on his podcast. Soyou put all that together, it's
3040, grand a month. But itdoesn't look that way on paper,
right when we look at from aFannie Mae or a Freddie Mac
standpoint, and he's a greatexample of somebody that would
benefit from your your uniqueprograms as well. Okay, that's
(07:56):
really cool. Now, I really wantto go also into dfcr a little
bit, because I think thatthere's a big misconception
about DSCR, and people justdon't understand what it is. Can
you tell us, like, what is DSCR?
What does that actually mean?
When you hear that word DSCR?
What does that mean?
Mark (08:17):
DSCR stands for debt service credit ratio, and you're
using the market rentals fromthe subject property to, in
essence, carry the cash flow ordebt service to cover the
mortgage payment.
Unknown (08:29):
So
Mark (08:31):
any investment prop purchase you're looking for
market rentals that's done by anappraiser. It's an appraisal
schedule. It's called a 1007 fora single family and or a 1025,
for a multi family, I can do apurchase investor DSCR 80 loan
to value one to four units usingthe market rents. You're not
(08:55):
using income to qualify for thisapproach. This is a non QM FIX
IT strategy. And again, there'sno DTI, there's no a US, there's
no findings. A file is simple tooriginate, and it's a great
nugget for your clientele baseto utilize 80 loan to value four
(09:17):
units, and then the DSCR, howthat's formulated is you're
utilizing, again, the marketrents, and dividing that into
the proposed payment. We call ita p, i, t, i plus a meaning, if
it's a condo with anassociation, basically full nut
of the pay, if it deposited cashflow. It's called one to one and
(09:38):
or greater than 100%
Unknown (09:40):
That's great from a standpoint,
Mark (09:43):
from a program matrix we allowed down 2.75 meaning that
property is going to have anegative cash flow, potentially.
Keith Goeringer (09:52):
Note too, before you go on, we should note
that most lenders will be a oneto one ratio. That's what I.
Paint so the back mature goingdown a little bit below the one
to one. We have one right nowthat we're working on like that,
and we were looking at it, andwe hit that. We knew we were
going to come in a little bitbelow one to one. It wasn't
(10:14):
much. It was like 6070, bucks.
But I was like, Oh my gosh,we're in trouble. And that's
when I reached out to you, andyou were like, No, man, we've
got something to take care of,which is amazing, because, like
I said, most lenders are lookingfor that one to one ratio, and
you're a little more aggressive,which I think is awesome,
Mark (10:31):
correct? So we have that additional we call it a bucket,
or opportunity for the client tofill that loan transaction. If
you're that tight, we canexplore other avenues, such as
qualifying the client on an IOpayment now call it an itty
instead of a pity, meaning nowthat payments going to be lower,
and see if we can increase thatdebt service to a potentially
(10:53):
above 110, and or a one and aquarter would be a sweet spot
for us, because then thatpricing bucket is going to
adjust,
Keith Goeringer (11:01):
and pity is pro interest, taxes, yeah, and
insurance. And what was theother one? You said
Mark (11:09):
Itty. I call it ID an IO, okay, you're qualifying that
mortgage payment into the debtservice as an itty, an IO,
meaning an interest only, taxesin insurance payments,
Keith Goeringer (11:21):
I see, okay, I didn't even know that was
possible. I just learnedsomething today too. That's
great. Okay, you qualify it,boss based off of off the
interest only payment. Okay,that is correct. Sorry. I just a
lot of people out there don'thave the 22 years of waking up
in the morning and doing thisevery day. They don't know what
some of that vernacular is,absolutely,
Mark (11:42):
I fully understand some another say prefix that I use.
It's called an air DNA. What isthat? This is great. It's for
anyone listen to this. It's onlypermitted on a purchase. Think
of it as like a Zillow gives youa value of what the property is
going to be, right? You plug inthe address, bedroom, bathroom,
count, air DNA is a hot,aggressive option. Or to qualify
(12:07):
to client on purchases, you plugin address, bedroom, bathroom,
count, and it's going to spitout a projected income over the
next 12 months for that subjectproperty. We could potentially
use that heat to qualify yourdebt service, even if it comes
in higher than the 1007 on themarket rental so again, this is
(12:30):
based on short term rentals forthis subject here DNA. This is a
great exit strategy, great valueadd for any Realtors listening
out there, it's calledrentalizer, and you and I can
plug and play in this and to seeif it can qualify, or to see if
we can pivot for your client. Sothe point of this is, there's
(12:50):
multiple options to qualifyclients. We have a lot of great
little buckets of opportunity.
It's just not your normalapproach. So that's what gives
me change a competitiveadvantage. And
Keith Goeringer (13:04):
most of these products are between what 70 and
80% loan to value, aren't they?
That
Mark (13:10):
is correct. My Max loan to value is 80 on investor. But
from a pivot, we can alsoqualify, if you're on investing,
investor as a subject property,we can pivot to an alt doc
option. Alt Doc is piggyback onan income stream approach, such
as personal bank statements thatwe talked about, 100% gross
(13:33):
deposit that client does notneed to be self employed. Now I
can get you an 85 loan to valuewith no MI, no mortgage
insurance for an investmentpurchase and or a larger loan
amount. So that would be a greatexit strategy, and that would be
a pivot again, going, maybe thew2 approach, maybe going that
bank statement approach, 1099,asset qualifier, asset
(13:58):
depletion. We didn't talk aboutthat one. That's a great option.
That's for somebody, say, with ahigh, big, large nest egg of
funds, anything from an assetinstrument of stocks, bonds,
mutual funds, 401, KS, whateverit is. We can use a depletion
method. You can use a divider by60. It's rather aggressive,
(14:20):
because industry and mycompetitors are going to divide
by 84 or 20, yeah,
Keith Goeringer (14:24):
that's absolutely right. That's the
Fannie Mae formula, absolutelyyeah. So
Mark (14:29):
think of me again. I'm giving you guys perimeter
product outside of that FannieMae box you have, so that
there's the pickup and there'sthe benefit from our guides and
matrixes that we can offer toyour clients. I
Keith Goeringer (14:42):
think we've also got to address the fact
that, because these loans are 70or 80% they're still pretty safe
for you guys. They're still avery good investment. I remember
when all that stuff happened, ina way, and I was thinking, the
reason that this happened was wewere doing these. Alternative
programs at 100% some of themwas 110% they're crazy. Now I
(15:07):
feel like they're much saferbecause they're lower loan to
values. Can you and can youspeak to that at all? Because
I'm sure everybody is listeningto this going, oh my gosh, we're
creating a we're creating thenext level of and we're not. And
I gotta tell you guys like Iwent through that whole thing,
right, and I still remember thebank statement loans themselves
(15:31):
performing extremely well, I'mtalking like, probably better
than some of the full doc loansback then, when I was at Fremont
and I prefer as well. Theyperformed extremely well on the
market. In my opinion, thereason most of that happened was
just pure stated loans and highLTVs of the stated loans.
Mark (15:54):
Yeah, this is a great pivot. So you're aging myself
too and but I was at some calledan old sub primer. So I work
with Lehman Brothers, and I havemany years doing some of these
programs. But these now non QMlook for additional assets.
Okay, additional reserves toqualify to mitigate our risk. So
these loans do perform, it's ahigher FICO bucket, and again,
(16:18):
reserves to mitigate the risk.
You're saying state, it state.
It's gone right? It was dating,quote, unquote, how much John
Smith works makes at the gasstation. That was a state. It
has an ATR. And this is a greatpivot to a strong one of our
value adds here, Keith, it'scalled Community. Why am I
(16:39):
saying community? Becausecommunity program, it's called
community does not have an ATR.
ATR, guys, means ability torepay. So this is a great pickup
for change, because in theindustry and out there, in the
non QM land in America doingwholesale, there's minimal
(17:00):
channels for exit strategieswith a no ATR, that's no ability
to repay,
Unknown (17:08):
not state it for a primary. So
Mark (17:12):
this should ring a bell in your video, because how do we do
that? And here's a value add.
It's called four letters. Mystory is I didn't know about
this until four years ago, andthat's why I took the position.
So I'm dating myself, but mylast run was a 13 year run doing
wholesale. I left that book ofbusiness because I didn't know
about a CDF communitydevelopment financial
(17:35):
institution. This is going togive you a value add for the
underserved, underbankedcommunity. This is big team.
CDFI stands again for communitydevelopment financial
institution. It's so big thatit's issued by the US Department
of Treasury, okay. Why is it sobig? Because it gives us
exemption. A CDFI is exempt, asyou mentioned before, ATR. ATR
(17:58):
is ability to repay. Okay, thisis part of the Dodd Frank Act
where we have exemption to ATRrealtors and fan base listening.
That means on your loanapplication that Keith cannot
can set up for you guys, no doc,no income, no income to qualify
(18:19):
or calculate it, and nothing isstated. There's that word, it's
almost like a curse word, butthere's nothing stated. Keith,
yeah, and there is no DTI tocalculate. So what we just
talked about is a nodocumentation, product that is
(18:40):
no employment stated, no incomerequired on a primary be
Keith Goeringer (18:50):
very similar.
If I walked into a bank and gota signature loan, right? I walk
into a bank I get a signatureloan, there's collateral, but
they're not really diving intowhat my income is, possibly
assets, but not what my incomeis, I think, and tell me if I'm
wrong, but it seems to me like,like you said, stated is the a
(19:11):
bad word. We're not statingincome. It is just flat. No
income required. There's no it'snot even looked at, right? That
Mark (19:23):
is correct. So again, how are we mitigating or the risk on
the file? First of all, comparedto the 2008 days, there's
nothing from a high loan tovalue bucket max on this program
is 75 Yes, it's for primarySecondly, we look at a FICO
minimum credit score for yourapplicant is a 680 and we do
(19:44):
want trade lines, meaning creditdepth on the applicant to
qualify, we look for two tradelines open and active for 12
months, or one reviewed for 24and or if they are a first time
home buyer, there's norestrictions. Dollars. But then
I can also use 12 months cancelrent checks in combination with
(20:04):
one Trade Month, the biggestpiece and the difference from,
let's just call it the 2008 2009days is we want more reserves,
reserves, meaning to mitigateour risk. We want the pity the
amount of the mortgage paymenttimes nine. If you're doing a 75
loan to value in the applicantsaccount, applicants accounts,
(20:27):
they can utilize any assetinstrument they have, stocks,
bonds, mutual funds, evenbusiness funds. That's nine
months 75 loan to value, theycan purchase a one to four unit.
Yes, you can get a gift for theother 25% down to structure your
loans, 75 loan to value. 25%potentially a gift, as long as
(20:52):
they have their reserves sourcedin season for 30 days six or
nine, and that's tiereddepending on your loan to value.
Now you're getting the Americandream, Keith, you're setting up
your clients and then gettingtheir primary residence loan
amounts currently up to $2million and again, this is a no
ATR loan, no dumb no doc on aprimary situation.
Keith Goeringer (21:16):
You figured this out four years ago. I
literally didn't know about thisuntil I talked to you about what
two weeks ago or so. I think Ihad no idea it even existed, and
that's my fault for not gettingout there and understanding the
programs I've been doing so manytype right VA conventional for
(21:39):
so long. I'm just glad we talk,because there's so much need for
this. Now I'm seeing this as Istart to talk to people and
realtors and things like that.
There is so much need for thisproduct, and it's really an
aggressive but still safeproduct. If, if you could put
those words together, I thinkyou can, these days, right? We
have an aggressive product, butis also a safe product. And I
(22:01):
think that's refreshing andpretty amazing, correct?
Mark (22:06):
Yeah, these loans do perform well. And again, they
have a Reserve Base, as yousaid, vanilla. Think of it as
the Fannie Mae box on theoutside of the perimeter
product. So yeah, great littlevalue add for your team, for
your realtor, base, for yourclientele. It's not for
everyone, but this is a greatsolution to a situation
(22:26):
otherwise the client can'treceive lending. So now you're
in that solution and basicallyfixing their problem and getting
them into the home. Okay, sogreat solution, great exit
strategy, great value, add team.
And
Keith Goeringer (22:42):
that's what I always loved, even back in the
bad days, right? I always likedthe fact that we could still
help people that other peoplewould not help, right? We could
still figure out a way, if youwant to become a homeowner, I'm
going to get out there and digand call and find a way for that
to happen. And that's reallythat's why we learned all these
(23:06):
things. There's this myth thatwe were all, everybody was on
the take and we were all tryingto do the wrong thing. That's
not what was really going on fora lot of us. We were just
looking other ways to helppeople get that American dream
of home ownership and and justtalking to other companies and
finding out what's out there,and that's exactly what I'm
(23:27):
doing right now. This isawesome. Have we missed anything
here? Anything else we need togo over? You think that's a
product that's worthy of talkingabout?
Mark (23:38):
Yeah. Again, there's a lot of good little niches in it. I
don't know how granular you wantto get, but I'm trying to
Keith Goeringer (23:45):
get. I don't know if my listeners get to stay
in that they're probably asleepby now,
Mark (23:52):
you and I, but think of me as that large toolbox and digest
all because we have a lot ofgreat little nuggets and a lot
of items that are just going tooutside of the normal vanilla,
as you said, that's the Briarsice cream, right? I'm the
chocolate chips. I have a lot ofnice little pivot points that we
can do options for, such asmaybe client with no trade
(24:14):
lines, maybe somebody withmortgage lates, maybe an
applicant qualifying with aduincome. Maybe they need a higher
expense factor on bankstatements. I have a written doe
program. I have propertieslisted. If they were listed
today on the market and theypulled it off tomorrow, they can
do a cash out. You can't do thatwith Fannie. It's a great term
(24:34):
only. So now that's thechocolate chip piece. I have a
lot of great little nontraditional methods. Hopefully
that's what comes across on thisconversation for your team to
pivot to explore options forlending part of the underbanked,
underserved community thatyou're given an exit strategy
to. So team, give Keith a call,and we can collaborate together
(24:57):
and come up with an approach tosee if they can qualify. Okay,
if they can't go from aalternative doc, we can also go
community doc, which is the nodoc. So there's a lot of great
value adds. Hopefully this waspositive. Keith and Oh,
Keith Goeringer (25:12):
I love it. It's been awesome. I have to tell you
a story. I was talking to arealtor. We were thinking about
working together yesterday, andwe were just talking about how
she had some deals that fell outand used to when you're busy.
Deals fall out because of,usually the lack of
communication or contact orsomething like that. Right now,
(25:34):
when you're not extremely busy,it's interesting. I'm finding
out that deals are found becausethe loan officer doesn't push or
try to figure out other ways toget the client to be able to
qualify, right? So the clientcomes to a loan officer, and
like you said, they're not usedto doing some of the programs
(25:56):
you have, and maybe the loanofficer doesn't even do what I
call a deep application, right?
So I think there's been thisinteresting just laziness in our
industry, where we send peopleto a website, and that person
fills out information on awebsite, and that application
comes back, and then we run thecredit, and from that we
(26:18):
determine if the loan can bedone as well as I do. Back in
the day, we didn't havewebsites, right? It was all
we're talking to that person onthe phone and handwriting the
application and learningabsolutely everything. I think
it's important for us to go backto that time, and if there are
loan officers listening, callthat client and go deep with
(26:40):
them as much as possible,because that's when you build a
real loan application, not offof a online application. Because
I can't find out these thingsand put them in the bucket of
what you do if I don't talk tothe client about absolutely
everything going on theirfinances and their assets, etc.
(27:01):
So I think it's important for usto really think about, like, who
people are working with when wedive into this stuff. But no,
this is dude. This is thank youso much for doing this and
spending your time. I don'tthink you guys get near enough
air time to tell us what'sreally going on in the
(27:25):
marketplace. I was thinking theother day. I was like, when was
the last time I heard anythinglike this on the internet at
all? It's told you this, butit's like, you guys don't really
have a voice, and I wanted togive you a voice as to how
unique some of your programsare.
Mark (27:44):
Yeah, I appreciate the voice in a phone call away, I
like to talk. I'm cold fashionas an AE, so I'm heavily getting
involved. And as you say, scrubthe client, really dissect what
they have going on. And let'ssee if we can pivot to an
alternative documentation toqualify your applicant. So it
really takes somebody seasonedlike you, Keith, with a long
(28:05):
mortgage career, to really drilldown, put on the gloves and go
to work and review what theyhave for options to qualify,
rather than just somebodyplugging and playing on an app
and online, as you say so, anyyellows out there. If you're
looking to learn
Unknown (28:22):
in this space, it's
Mark (28:25):
you got to think outside the box. It's creative lending,
and we have a lot of options. Iknow our rates are aggressive. I
know what I can do for service.
So hopefully you guys think ofme. Hopefully you had some
takeaways from this call.
Hopefully we can close moreloans.
Keith Goeringer (28:38):
Absolutely.
Thank you for your time Mark.
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