Statistics point to the fact that more than half of today's home buyers have some sort of credit glitch that would stop them from qualifying for an "A" grade mortgage through Fannie Mae, VA or FHA traditional financing sources. Our belief is that these buyers need alternative source funding. They need an expert that knows investor guidelines inside and out. This void in the financial arena is one of the catalysts that drove Armando Barbosa to open Vision Mortgage Company, Ltd. in 1997. Undoubtedly, Vision Mortgage Company, Ltd. carries the most complete line of "B" and "C" financing programs from investors around the country.

The non-traditional home loan arena consists of loan programs that are not readily divisible into the traditional residential financing loan categories. To simplify the explanation, this area will be examined by viewing:

• No Doc Funding

• B & C Financing

About No Doc Funding

No Doc Funding consists of loan underwriting without regard to employment information. Our True No Doc loan programs do not include any questions whatsoever with regard to current employment or past job history. This funding is ideal for the newly self-employed borrower, the borrower that is relocating and is between employment positions, or even the truly unemployed borrower. It can also be used to fill a time line that does not allow for a preparation of a tax return or employment information normally necessary for traditional financing mediums. The mortgage application consists of some very basic data and can be utilized with or without information about assets to close the transaction. Here are some program highlights to consider:

• No Income Questions: Since income is not an issue, neither are qualifying ratios. Given the other program parameters, prospective borrowers will "automatically" qualify for financing.
  
  ********News Alert********
     NO DOC funding was a part of our financing arsenal for over 20+ years. During that time a number of Lenders were involved with this form of financing. One of the principal players was a company named Greenpoint Mortgage Company.
     With the advent of the debacle that has taken place in the mortgage lending arenas many Lenders have restricted their loan products. Some of which the type of mortgage they originate altogether. Since late 2006 and through 2007, over 200 Lenders have shut their doors. Unfortunately, Greenpoint Mortgage was one of them.
     So, the NO DOC funding that once existed is history….for now. It has been replace by high FICO score requirements and STATED income financing. Stated differs from NO DOC in that, as it sounds, the income is simply STATED vs. verified income.
     There is a “makes sense” test that applies to STATED income now. The income has to make sense of the borrower’s occupation. In other words, you can STATE that a borrower is a dishwasher at a restaurant and earns a salary of $8,000---it does not make sense. This form of financing is riddled with gray areas and requires an in-depth look at the entire scenario.
     Contact Armando Barbosa directly to discuss your scenario.

About B and C Financing

"Credit challenged", "crippled credit" applicants, and "B" Borrowers. These are all terms that have been used to describe a segment of the home buying population who, due to the impact of certain financial circumstances, would not qualify for traditional home loan financing. B and C money has been dubbed the "second chance financing" of the late nineties.

This phenomenon developed as lenders began to focus on the demand and scope of the market they were addressing. It has been estimated that over 52% of the home buying public has some sort of credit or investment glitch that would divert them away from traditional financing.

B and C does not always simply relate to credit. If a customer has good credit but no down payment, buying a home could seem like an impossibility--but not with B and C funding. Lenders allow for 100% financing therein rewarding good credit borrowers.

B and C may also relate to the need for some sort of a typical income verification program. Stated Income loans are common in the B and C market. This means that, given the appropriate down payment, the borrower simply "states" what their income is and qualifies for the mortgage on that basis. There is no proof or verification of income required. Using the average of bank statement deposits as income is another common method of alternative verification of income used by B and C lenders.

When past credit performance is an issue, B and C lenders have pioneered grading systems that range from FNMA/FHA "just missed" A borrowers to criteria that does no consider mortgage or consumer credit histories. Below is a chart that will help explain the various grading levels and sectors.

* NOD = Notice of Default. This notice is issued by lenders to inform the borrower of pending foreclosure procedures. Most lenders no longer consider NOD financing.

¤ Full Doc = Full income verification that includes W-2 and pay stub information, or 24 months of bank statement averaging may be substituted for B paper financing only. Lite Doc = 6 months of bank statement averaging. Stated Income = no verification of income other than what is stated by the customer. In some cases, IRS Form 4506 must be signed and verbal verification of employment is performed. A letter from a CPA is required to evidence 2 years of self-employment status.

± Sample Financing Rates are supplied for use by Real Estate Professionals in estimating what a borrower's rate might be. Actual rate will depend on the applicable program, credit grade, down payment and other contributing factors. APR will be provided when borrower contact has been made and an applicable assignment has been made. Lowest monthly payment is calculated by using the 2/28 loan. The rate is fixed for 2 years and then becomes a 6 month Libor variable rate.

** Real Estate Professionals can estimate the monthly principal and interest payments applicable to the given rate and grade by multiplying the proposed loan amount by the factor and dividing by 1,000. Example: A Grade at 9.49% for $100,000 loan. Calculate by 100,000 x 8.41 = 841,000/1,000 = $841. The resulting monthly payment is $841.

Please let our staff demonstrate for you the savings associated with any of our loan programs tailored to meet your financing needs.

Copyright © 1998 - 2006 by Vision Mortgage Company, Ltd. Copies or excerpts of this publication may be taken and distributed in any form, provided that the author's name and the Internet address remain intact. Links to this document are welcome.

Contact Webmaster