The Truth About DSCR Loans (And Why You Need One)

SPEAKER_1 (0:01)

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Michael Zuber (0:31)

All righty, folks, a lot of the mortgage industry is struggling, but one guy is not, and that is Mr. Stephen Dow from Velocity Mortgage. He worked velocity mortgage is what I call a make sense lender. As the conventional rates have risen, his loans are looking better and better. Add into that speed and ease, no ratios, all that good stuff. It kind of makes sense to me why in this environment, Stephen Dow is busier than ever before. Stephen, how you doing, buddy? What's going on?

Stephen Dow (0:58)

Oh, I'm busy. But also I think off camera, you and I talked, it was just some IT, you know, technical difficulties that are slowing me down, which is the kind of frustrating part. But otherwise, yeah, busy, more so than ever really, to be honest.

Not, I wouldn't say ever, but given the circumstances right now in the environment, relative to other people in our industry, I'm doing-

Michael Zuber (1:20)

No, no, we'll get into all that, but let's not forget that marketing spiel.

Stephen Dow (1:24)

Oh yeah, before we get too deep down the rabbit hole. Although I work very happily for Velocity and Morgan's Capital, all the ideas and topics discussed on this channel, that of my own, so let's get it going.

Michael Zuber (1:33)

Yeah, so that's really what I want to talk about, because I assumed before we started this conversation with the conventional rates rising, with the opportunity out there for investors, I actually assumed your business was exploding, because there's a lot of folks in the conventional FHA, all of that, that are really, really struggling today.

And, you know, again, you play really in a different market. And I'm guessing you're probably seeing business in both purchase and refi. But I'd love to hear from you. What's, you know, why the uptake in business, you think?

Stephen Dow (2:04)

I mean, from what I'm hearing and what I'm seeing is a lot of DSCR loan fallout. Because with the jump in rates, what initially qualified when they first submitted the loan, doesn't now, or even in some cases, I think lenders aren't saying that, but they're tightening their guidelines.

Michael Zuber (2:23)

Yeah.

SPEAKER_1 (2:23)

And so, you know what I mean?

Stephen Dow (2:24)

And so they'll make every excuse to do so. But long structure, I'm getting a lot of requests for, do you accept transfer appraisals? So that means that they start off with another lender, something happened, the loan fell out, and now they're looking for an alternative and don't want to spend extra money. So in some cases, we can't take transfer appraisals, but I'm seeing definitely, I'm getting a request for about one to two a day.

SPEAKER_1 (2:45)

Wow.

Stephen Dow (2:46)

Yeah.

Michael Zuber (2:47)

Yeah. Those are good problems to have. The other thing that I'm going to imagine, and again, I knew this was coming for Velocity, because you're the only game in town for this 90% CLTV loan.

And when sellers are desperate, and they're not getting their number, sometimes they got to accept terms, and the 90% CLTV is like God's gift to creative financing. So I'm guessing you're seeing more phone calls about that?

Stephen Dow (3:12)

Oh, no doubt. And believe it or not, I'm even seeing it on potential refis, because with certain private investors looking to get their money back, I think they're seeing kind of the details of the market, and they're able to kind of, oops, excuse me, sorry about that, let me.

Michael Zuber (3:28)

You're good, don't worry about it.

Stephen Dow (3:30)

I think they kind of see the writing on the wall, like we'd rather get a little bit of something than a whole lot of nothing. It's like trying to catch a falling knife with the longer we stay here, I want to get paid up entirely. Well, what if I could give you at least 75% of your money now?

Maybe the difference you can be willing to carry in a small second.

Michael Zuber (3:47)

That makes sense.

Stephen Dow (3:48)

Yeah. And actually, I just had two yesterday after the quote. So there's still negotiations, I think with some of these current lean holders or whoever, I think they can kind of see the writing on the wall. So rather than doing a short sale and going through all that and paying all those extra fees, it's like, let me pay you almost in full, the remaining balance, you're going to get still some passive income.