Written By: Glenn Michaels, Op-Ed Writer
Since the mortgage melt down the big push has been the Qualifying Mortgage (QM). Loans that fit the QM were most government mortgage programs (FHA, VA, and USDA) and most agency loans provided by Fannie Mae and by Freddie Mac.
Unfortunately not every borrower can qualify easily under the QM lending rules, especially many self – employed borrowers, jumbo loan borrowers, investment property owners and borrowers with lower credit scores.
Self – employed borrowers depending on the type of business rarely report their actual income and expenses. Many of these borrowers cannot qualify for a QM mortgage.
Jumbo borrowers usually need expanded ratios in order to qualify.
There are now some non – qualified mortgage programs that will allow borrowers to obtain mortgage financing. Some of the non – qualified mortgage programs are below:
Interest Only mortgages. Mostly offered by larger banks for jumbo prime loans.
Expanded ratios normally greater than 43% debt to income (DTI). Ratios are coming in at 50% to 55%. Very often the Automated Underwriting System (AUS) will approve a borrower with liquidity an approval with expanded ratios.
Business loans on investment properties. Many borrowers who own 2 – 4 family homes will be offered to form a corporation and will be offered a business loan. These loans fall out of the Qualifying Mortgage requirements.
Bank Statement – Alternative Loan Document Program, more financial entities are beginning to offer these loans to self – employed borrowers. The bank statement if analyzed correctly the self – employed income can be determined. There are more of these bank statement programs popping up.
Asset Programs for the self – employed and very liquid borrower. Many of these borrowers pledge a liquid amount for their assets for the loan.
If you keep your eyes and ears open you will spot more and more non – QM mortgage loans being offered. In fact, recently a wholesale lender came out with a program for the non – qualified mortgage with warehousing so participants would not have any difficulty with their warehouse bank(s).
About The Author
Glenn Michaels - As an op-ed writer, Glenn Michaels is a mortgage underwriting instructor for CampusUnderwriter (www.MortgageUnderwriter.org). As a BBA & FHA DE Underwriter, Glenn is a Pace University graduate who also graduated from New York University’s School of Mortgage Finance. Glenn has conducted numerous training classes and has worked in the mortgage banking industry for 38 years.
