Executive Conversations is a HousingWire web series that profiles powerful people in the financial industry, highlighting the operations and the people that make this sector tick. In the latest installment, we sit down with Will Fisher, senior vice president of loan origination at Citadel Servicing to learn more about Citadel’s Non-QM product, ODF+ program.
Q. Who benefits most from the ODF+ program?
A. The primary beneficiary of Citadel Servicing Corp’s Outside-Dodd Frank Plus (ODF+) program will be borrowers and real-estate investors of multi-family 5 to 35-unit properties, mixed-use, and hotel/motel properties. Our product has a unique flavor compared to what’s currently offered in the space. While most commercial lenders need a 1-to-1 or higher debt service coverage ratio (DSCR), our program will allow as low as .75 to 1. Additionally, we’ll allow down to a 500-credit score and we’re not charging lender points for the majority of the product. This puts the ODF+ program in the unique position to be a zebra in a heard of horses. We’ve also opened it up to commercial only brokers, this program is available for all types of licensed or unlicensed finance brokers. NMLS or no NMLS it does not matter, we abide by state specific requirements for commercial licensing.
Q. How does this differ from the original ODF program?
A. Current ODF program is geared to the 1 to 4-unit property type, and since those properties are considered residential, they require different licensing, disclosures, terms, and income documentation types. Many of the same DSCR programs were originally born from the original ODF program, as ODF+ is an extension of ODF, which was the first like it to market in 2014. ODF was designed to be a disintermediation of hard money / private money offerings. CSC separated itself by having no lender points, no pre-pay penalties, and qualifying everything on a 30yr amortization. Some of those same attributes have continued through to ODF+. Lastly, we offered a rate that was far below the average for the space.
Q. How do Brokers or Correspondent Sellers benefit from the ODF+ program?
A. In many ways. To begin commercial lending can be a disjointed process, the majority of lenders have a unique or cumbersome process that provides little to no uniformity and may require many levels of approval. We’re simply adapting this property type into our current flow, which provides uniformity and efficiency. Most residential mortgage brokers and correspondent sellers have shied away from similar products for that reason, searching for the economies of scale that FNMA, FHA or even Non-Prime can provide. Our offering provides a consistent framework to operate and produce volume. In that vein this is a product extension for brokers and sellers, a vast opportunity to expand their business and clientele. At the end of the day it’s about ease of use and familiarity. If a broker can figure out how to originate a Non-Prime loan, then it’s an easy extension to learn the needs of the commercial product. The familiarity is the flow and it’s appealing for traditional residential brokers. As for commercial brokers who are accustomed to limited programs, tough terms, higher rates, and lender points, this opportunity speaks for itself.
Q. What feedback have you received from customers?
A. Very positive, especially from the Commercial broker community, which for this product is the gold standard seal of approval. It seemed every week since launch had commercial brokers inquiring when could they sign up. A few weeks ago, opened the product up to Non-NMLS commercial brokers, looking at the competition to find where the most value could be provided.
Q. What does the future look like for Citadel in the Non-Prime / Non-QM space?
A. In a word… Innovative. For the last six years CSC has introduced new products into the space and watched them all grow in popularity and watched our competition try to imitate/ replicate. CSC only puts out products that make sense for a borrower and the lender. The loans we make need to fill a specific consumer demand and have a high ability to perform or repay. Using this as a cornerstone when moving a lending product from ideation to production has served well and should continue into the future. The trick is to stick to our knitting.