The Bibel Team: Non Agency Financing

Eric: Hey everyone. Eric Bibel here with the Bibel team at NEO Home Loans. I wanted to get information out to you in regards to some of the unique non-agency financing that we’re seeing take a big presence in our marketplace. 

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If you like to content that you’re seeing here today, please like, subscribe, follow, comment, so we can continue to deliver the content to propel us forward. So, we continue to get a ton of questions around different options outside the conventional financing world. And really, post pandemic, we’ve seen a significant resurgence inside the non-agency space. Non-agency. What is non-agency? So, agency financing is historically anything that is considered conventional. So your veteran financing, first time home buyer through FHA, agricultural, so USDA financing and conventional. Non-agency is anything that operates outside the traditional Fannie Mae or Freddie Mac model. So something securitized on behalf of those two agencies. Non-agency has taken a significant step post pandemic, and really opened up avenues for borrowers that typically don’t meet that standard criteria. 

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So what we’re seeing, and really what’s become available, is unbelievable. Opportunities to enter into financing based on review of bank statements. So really for self-employed individuals that may have some unique tax strategies cultivated on their tax returns, where really the bottom line number may not be reciprocal of what you’re seeing deposit month over month. So inside the bank statement program, allowing a borrower to qualify based off cash flow deposit. That has opened up some significant avenues, especially for self-employed individuals. There, historically, we’ll want to look at usually a 12 or 24 month average of the bank statements. And there will dictate income based on how the deposits after debits work out. So again, opening up avenues where maybe a tax return will show pretty aggressive write offs, which is pretty indicative of a self-employed entrepreneur. So again, opening up channels for individuals that may not fit the traditional mold under Fannie Mae or Freddie Mac. 

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Another unique product that we’re seeing a tremendous amount of lift on is investor type financing. Typically under the Fannie and Freddy model, once you finance 10 properties, the options become very restrictive. You typically have to look to private money solutions, which come with significantly higher interest rates, higher down payment requirements, really more restrictive. Based on the risk profiling partnership that we’ve cultivated allows now for up to 25 finance properties, which is massive, especially as we continue to see real estate as a primary means of wealth building. Especially as inflation has become yet again, another central piece inside our economic landscape. Massive earnings retain within the crypto market. People are wanting to exercise that into real property. So again, real estate being that primary means, this program allows for you to ultimately finance multiple options. 

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Another unique attribute within the investor pool is, instead of evaluating the borrowers credit worthiness, so documenting the borrower’s income to qualify for the property, we can actually take the performance of the subject property. So, looking at the rent rolls compared to the cost of the mortgage and evaluating and underwriting the risk based on the performance of the property. So really, assuming you have the necessary down payment requirements, we can now evaluate your credit worthiness based on the performance of the property. So really taking you out of the equation and looking at from a cash flow perspective against the subject home. So again, a very unique advancement there. There are other significant advancements inside asset approval. So looking really at, if you come to us with the ability to put down 20%, qualifying based on credit score, the asset for the down payment and credit worthiness are typically having a credit score north of 640, those attributes allow us to cultivate an approval. So again, really stepping away from the traditional means of evaluating under the Fanny and Freddie model. So again, some significantly unique options as we springboard into the new year 2022, which is forecasted to be one of the most prosperous purchase markets we’ve seen in years past. 

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So with the expansion and partnerships of these unique options, it’s really just laying the foundation for more at bats for our clients. If you or anyone, you know, has questions specific to what we’ve discussed here, we would love the opportunity to review them in greater detail. Please reach out to my team and I today. Thank you.

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