Lenders are backing out: What you need to know

Michael Zuber (0:00)

All righty, folks, rates are shooting higher, but what you may not be realizing is there's more and more lenders that are getting nervous. What do I mean by that? I have had multiple conversations this week who were pre-approved with another lender, and then when it came time to close, they could not make it happen. The reason I had these phone calls is people know I have relationships across the country, and they're asking me, who do you know that could be a good plan B? And I gotta tell you, Stephen, you are the answer, unless it's owner-occupied. If it's owner-occupied, obviously, I've gotta go somewhere else, you do not play there. But you have helped me and many other investors by being a plan B.

Before we get into all of that, please do the marketing spiel, so neither of us get in trouble.

Stephen Gallard (0:46)

Well, then, again, although we're very happy for Velocity Mortgage Capital, all the ideas and topics discussed on this channel, they're out of my own, so let's get going.

Michael Zuber (0:53)

So again, you've always told me, you're a great plan B, even though you jokingly call yourself Uncle Steve, I've always referred to Velocity Mortgage, who I have used, let's be clear, as a makes sense lender. I think in an environment with higher rates and competition that's getting nervous, I'm hearing more and more people have to take back properties in this space, which probably is why they're nervous, right? Their books aren't as clean.

Why is Velocity the makes sense lender and Uncle Steve the plan B?

Stephen Gallard (1:26)

Again, I think right now in this current environment where if you're trying to go for alternative financing outside of full doc or even going full doc, as far as tax returns, pay subs, W2s, or maybe doing a bank statement or even VSR type products, I'm seeing a lot of looks as far as fallout from that because with rates moving over those last couple of weeks, what initially submitted at qualifying now not, and or a couple of lenders, yeah, they said that they were approving it, and then for some reason, they got nervous and they didn't like the cash flow or something like that. So I'm seeing a lot of like, hey, do you take transfer appraisals? You take transfer. So I'm getting fallout for a number of different reasons, but I think with certain lenders, they may not tell you that they'll just show you by like tightening up in the guy, oh, well, that's just, you know, a lowered LTV or increased FICO score or whatever.

Michael Zuber (2:20)

Yeah, when lenders don't want to lend, they make up any bullshit excuse they want. They make it harder, right? They're gonna make it impossible. They tell me exactly right. They're gonna tell you hoops to jump through. If you're a novice investor, you're gonna try to jump through the hoops. If you do jump through the hoops, they're just gonna throw up more hoops. They don't want to invest with you, right? So get a plan B, always have a plan B, but it's unfortunate to new people who may have done a couple of loans who suddenly get a no answer or a not now answer.

So yeah, tell us what a transfer appraisal is, because maybe people don't know what that is.

Stephen Gallard (2:57)

Sure, well, typically when applying for financing, sometimes you'll start with one lender and it doesn't work out, but you've already paid for an appraisal.

Michael Zuber (3:05)

And you have one.

Stephen Gallard (3:06)

Starting with another lender, typically you have to pay for another appraisal, such as with our process. But right now, with presidential property, in some cases, we're able to take their already...

Michael Zuber (3:17)

Yeah, completed.

Stephen Gallard (3:19)

Right, completed appraisal report and have it transferred over to us. It saves a lot of time, because usually with us, it's about 7 to 10 business days. They may have to pay a small transfer fee, not to us, to the appraiser to do so.

Michael Zuber (3:30)

Yeah, to re-stamp it.

Stephen Gallard (3:31)

Right, but it'll save a ton of time. But if the value is there, and you just didn't qualify as far as income-wise, or debt-to-income ratio, or any kind of ratio, that's where I can kind of step in. And right now, where I'm seeing a lot of fallout is on the higher dollar amounts, because it was really tough to qualify, going DSCR anyway, on anything 2 million and above. Right now, it got really hard, or even harder, I should say.

So I've got a super jumbo product from 2 million to 10 million, no ratio, up to 65% LTV.