HousingWire sat down with Jaye Craft, sales manager at Citadel Servicing Corporation (CSC) to talk about the growing demand for non-QM loan products and how CSC is meeting that need.
Q. There is a lot of interest in non-QM these days. As a long-time provider of non-prime wholesale and correspondent lending products, where are you seeing the most growth?
A. We are seeing tremendous growth within the non-QM sector. CSC has developed the systems, processes and partnerships that will enable us to compete effectively and thrive. As a result, we're well-positioned and looking forward to a profitable and growing future in this market segment.
Q. What CSC products are specifically geared for borrowers who have non-traditional income?
A. CSC rolled out the One Month Bank Statement program in 2018 and it has become our No. 1 program for self-employed borrowers who are unable to show traditional income streams. The One Month Bank Statement satisfies the ATR requirements completely while providing adequate income documentation.
Q. CSC has rolled out several innovative new products recently, including the ODF+. What is the tipping point for introducing a new product?
A. There are very few lenders, if any, who are doing what we are doing. The ODF+ program is offering a wide range of loans, including mixed-use residential/commercial influence, 5-35 units and hotels/motels with very competitive rates starting at 6.50%.
Q. Some people are still scared of a growing non-prime market. What would you say to them about how today’s non-prime products differ from the subprime lending of the past?
A. In that wild and nonsensical era between 2003 and 2008, the average credit scores to qualify for a subprime mortgage were significantly less than today. I personally have seen a significant number of loans in that era with scores as low as 580, and in most instances, income documentation was stated!
Another component of the old subprime mortgages was that someone with that low credit score and no income verification could get a mortgage with very little or nothing as a down payment. The infamous 80/20 loan program comes readily to mind.
In contrast, the non-prime/non-QM mortgages of 2019 feature average credit scores of 700 or thereabouts. Also, income documentation is always required on a non-prime loan. Some will be glad to know that there are alternative methods to verify a borrower’s cash flow, such as using bank statements to prove their ability to repay — and the calculations of that cashflow are correlated to a reasonableness test.
Q. What excites you the most about non-QM right now?
A. CSC was the first lender to return to this space and it’s exciting to still be a part of this journey. We are continuing to grow and add products to be able to help our borrowers in a way not many other lenders can or are willing to do.
CSC is truly growing into a modern-day finance company with a desire to finance virtually any type of real estate while maintaining full customer contact during the entire duration of the loan’s lifetime.