Shmuel Shayowitz (NMLS#19871) is President and Chief Lending Officer at Approved Funding, a privately held local mortgage banker and direct lender. Shmuel has over two decades of industry experience, including licenses and certifications as a certified mortgage underwriter, residential review appraiser, licensed real estate agent, and direct FHA specialized underwriter. Shmuel provides a uniquely holistic approach to comprehensive real estate and financial matters that goes well beyond any single transaction. Shmuel is an award-winning financier recognized for maximizing the short-term and long-term objectives of his client. As a contributing writer to many local and regional newspapers and publications, his insights have been featured in the media for many topics, including mortgages, personal finance, appraisals, and real estate trends.
In the aftermath of the “Great Recession,” new regulations were introduced to protect consumers and to ensure that banks fully evaluated an applicant’s “Ability to Repay” when being offered a loan. As a result, mortgage loans fell under two distinct categories of “qualified” mortgages and “non-qualified” mortgages. Despite the negative connotation in the name, a non-qualified mortgage merely means that it is not exempt from the Federal regulations of lending. For many banks, complying with this regulation meant becoming extremely narrowminded in their approval process and limiting loan options only to the few who fell perfectly into place.
Many are familiar with the traditional financing offers by conventional banks through Fannie Mae, Freddie Mac, and FHA, but as regulations become more favorable for lenders, “Unconventional” mortgages starting to become even more popular. New loan products such as “Non-Prime” and “Non-Conventional” alternatives started to evolve and have become more readily available to deserving mortgage applicants who are being disqualified from traditional financing. For those paying close attention, or for those in search of specialty loan options, they might be pleasantly surprised to see that some of the creative products of yesteryear are once again starting to resurface. This is a welcomed opportunity for some, but a potentially frightening change in the marketplace.
The Mortgage Bankers Association recently held their annual conference in New York where many of the industries top banks and investors gathered to hear the latest and greatest developments in the market. Many complained and griped about the rapid rise in interest rates; Many detailed how the industry is starting to see consolidation which they forecast to continue as business slows; Many howled over the politics and regulations that are making it ever so challenging to provide affordable mortgage loans to suitable applicants. There were some however who quietly started to rumble about the shift in business to alternative loan products.
The underlying problem for many lenders who are geared to service the conventional marketplace is that their loan officers don’t have the aptitude to provide solutions to those who need sensible options. Many loan officers in the business today jumped in when the Federal Reserve was stimulating the economy with low mortgage rates, and when home prices were starting to come off their record lows – and they are only familiar with one-dimensional lending programs. It takes a depth of experience and knowledge to know how to guide someone into a non-conventional loan program adequately and to see the loan get approved and closed successfully. This is a skill most inexperienced loan originators never developed.
The good news is, non-depository lenders, such as Approved Funding, are picking up the slack and offering affordable and creative loan options, that are worthwhile to qualified applicants – which are well within compliance and extremely safe. For those with limited income or asset verification, or reasonable credit imperfections, or perhaps home valuation methods that don’t necessarily fall under the “Conventional” standards – solutions are now feasible! A competent mortgage banker, like Approved Funding, can highlight options available under the qualified mortgage standard as well as those outside the qualified mortgage definition that might still be a very practical and useful mortgage solution to meet a homebuyer or homeowners needs.
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