As you probably know by now, the Federal Housing and Finance Agency has limited GSEs to a 7% cap on loan purchases for second home and investment properties. This means that lenders who sell these types of loans to Fannie Mae and Freddie Mac will be subject to restrictions if their volume exceeds 7%.
How does this impact originators? It could pose a real challenge. Real estate investors see a significant opportunity in the single-family rental space. Due to tight inventory and increased competition, investors need to close on loans quickly. They need a go-to lender who can get it done. This is a new environment of managing specific loan volume within the overall agency production, now and going forward. The options for originators and their real estate investor clients get smaller trying to find someone to do these loans. Along with the cap, guidelines are tightening for these loans, making alternative loan solutions––such as non-QM––a must-have loan offering outside of Agency.
Are there lenders not subject to the limit? Yes, and Angel Oak Mortgage Solutions is one of them. Our loans are backed by private capital through our affiliate Angel Oak Capital Advisors and we are not held to limits set forth by the FHFA. This allows us to continue to support originators and their investor clients without any restrictions. It is business as usual for us when it comes to second home and investment loans. We have Agency options, and when that won’t work, we can pivot quickly to a non-QM product without a delay for a quick close.
What are solutions outside of Agency? Angel Oak Mortgage Solutions offers several non-QM loan options to purchase second homes and investment properties. Investor Cash Flow is an easy loan for real estate investors not wanting to use tax returns or income. This loan qualifies using the cash flow of the property. A Bank Statement loan allows bank statement submissions instead of tax returns. Full doc options include Platinum Jumbo and Portfolio Select. Portfolio Select is a good option for those just two years out of foreclosure, short sale, bankruptcy or deed-in-lieu.
Find a non-QM partner: Angel Oak Mortgage Solutions not only has the product options to help but also many other resources for support. Finding buyers for investment and second home loans doesn’t have to be a challenge when you have a lender helping you. We can help educate you and your referral partners so that it is understood that the FHFA cap is not a risk aversion but a decision to simply better manage a disproportionate focus on investor loans. Let us educate you on how to use non-QM to close more of these loans resulting in more referrals. We have presentations, marketing flyers and innovative products ready to help you get it done. We will schedule a meeting or webinar anytime for you or your clients.