Published on March 11, 2014
Three Case Studies in Turning noThree Case Studies in Turning no Loans into LoansLoans into Loans By Robert RatimorszkyBy Robert Ratimorszky
What is an AlchemistWhat is an Alchemist According to Merriam WebsterAccording to Merriam Webster an Alchemist is someone thatan Alchemist is someone that practicespractices Alchemy which is the power orAlchemy which is the power or process of transforming somethingprocess of transforming something ordinary into something special orordinary into something special or in this case transforming no loanin this case transforming no loan into a loaninto a loan
Today’s ObjectivesToday’s Objectives Why deal with challenged creditWhy deal with challenged credit clients.clients. We will be looking at three specificWe will be looking at three specific cases where we were able to turncases where we were able to turn loans that at first looked like noloans that at first looked like no deals into deals.deals into deals. How you can use these techniques toHow you can use these techniques to turn those challenged credit clientsturn those challenged credit clients into a very profitable loans.into a very profitable loans.
Why Deal with Challenging CreditWhy Deal with Challenging Credit Clients?Clients? Satisfaction of helping a person that reallySatisfaction of helping a person that really needs your help.needs your help. They are a captive audience mostThey are a captive audience most originators do not want to deal with them.originators do not want to deal with them. It’s like riding a bike once you do a few ofIt’s like riding a bike once you do a few of these loans they will become secondthese loans they will become second nature.nature. There are less originators going afterThere are less originators going after these clients, why because they are notthese clients, why because they are not easy.easy. I looked at it like less means more.I looked at it like less means more.
What I DidWhat I Did Did some research into loan programs.Did some research into loan programs. Inviting the account reps into the officeInviting the account reps into the office where they walked me through therewhere they walked me through there online pricing and underwriting systems.online pricing and underwriting systems. It is very simple to learn and can take allIt is very simple to learn and can take all but a few minutes to walk through.but a few minutes to walk through. They know what they are talking about.They know what they are talking about. Another type of business is FHA manualAnother type of business is FHA manual underwrites.underwrites.
What I DidWhat I Did Kept it simpleKept it simple – We did not want to use to many lendersWe did not want to use to many lenders which reduced confusionwhich reduced confusion – I figured that if I got to know two orI figured that if I got to know two or three sub prime lenders well.three sub prime lenders well. – I got tired of constantly chasing the bestI got tired of constantly chasing the best deal.deal. – They offered the least amount ofThey offered the least amount of headaches when it came time to getheadaches when it came time to get underwriting conditions from the client.underwriting conditions from the client.
Why I Picked ThemWhy I Picked Them Easy to use online pricing andEasy to use online pricing and underwriting enginesunderwriting engines – Simple online underwriting similar to DOSimple online underwriting similar to DO or LPor LP – Wide range of products that cover mostWide range of products that cover most sub prime lending.sub prime lending. – An account executive that knows thereAn account executive that knows there programs and can look at a scenario andprograms and can look at a scenario and turn it into a loan.turn it into a loan.
Turning Dead File Into a FileTurning Dead File Into a File What we did for the clientWhat we did for the client – After some credit coachingAfter some credit coaching – We ran loan through a lender search engine.We ran loan through a lender search engine. – After consulting with Account ExecutiveAfter consulting with Account Executive – We were able to take him off the loan and goWe were able to take him off the loan and go stated 100%.stated 100%. – Mind you she is a daycare director makingMind you she is a daycare director making about 25,000 a year we stated her income atabout 25,000 a year we stated her income at 5750.5750. – Steve helped me structure the deal to make itSteve helped me structure the deal to make it work.work.
Sample File Rate and TermSample File Rate and Term RefinanceRefinance Main challenge income and creditMain challenge income and credit scores.scores. Worked for Target as a storeWorked for Target as a store manager.manager. Income 25,000 a year.Income 25,000 a year. Has 25% equity in his home.Has 25% equity in his home. 618 mid scores.618 mid scores.
Overcoming the challengesOvercoming the challenges Ran it through D1 online pricing.Ran it through D1 online pricing. Was able to go stated through D1Was able to go stated through D1 Came up with a better yield spreadCame up with a better yield spread then previous lenderthen previous lender
Sample FHA Manual UnderwriteSample FHA Manual Underwrite ChallengeChallenge – Low credit scores with minimal creditLow credit scores with minimal credit historyhistory – No rental historyNo rental history – No assetsNo assets – Self employed prior to Nov 2005 mostSelf employed prior to Nov 2005 most lenders wanted 05 W-2 or tax returnslenders wanted 05 W-2 or tax returns he only made 12,000 last year.he only made 12,000 last year.
Why FHAWhy FHA Credit scores do not matterCredit scores do not matter A good LOX in many instances will go aA good LOX in many instances will go a long waylong way Length of credit history does not matterLength of credit history does not matter They do not have to have a rental historyThey do not have to have a rental history No reserves requiredNo reserves required
In ConclusionIn Conclusion Be patient the first loan WILL take youBe patient the first loan WILL take you longer to get through.longer to get through. Be patient with the clients they are new toBe patient with the clients they are new to the process and are not as educated as athe process and are not as educated as a 700 borrower.700 borrower. Remember not to over promise and underRemember not to over promise and under deliver.deliver. Explain to the client what you are doingExplain to the client what you are doing and why you are doing it.and why you are doing it. Then you will be able to dictate your feesThen you will be able to dictate your fees on these loans and will not have to worryon these loans and will not have to worry about getting squeezed by your borrower.about getting squeezed by your borrower.
... prepared for them. Unless you want them turning into kids like the ... Taking Out a Mortgage. ... two of the most profitable ...
Ruptured credit Securitisation has ... and passing them on to arrangers who would parcel them into ... washed into the sea is causing dead zones ...
... IndyMac Mortgage Holdings, Inc ... IndyMac was taking new measures ... Senator Charles Schumer's warned the public of them. IndyMac ...
A lower mortgage rate puts money into homeowners’ pockets when they refinance their loans (mortgage origination ... Turning off the entire ...
The dot-com bubble (also known as the ... of their market capitalization but remained stable and profitable. ... establishment by drawing them into fake ...
... places that got larger profits by turning them into finished ... as much water as they might ... v profitable bc of loans and gifts of ...
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... a lawyer and former Methodist minister. ``Only a very strong government might ... turning itself into ... turning them into profitable ...
... so they type them into Turbo ... get turned into the equivalent of a mortgage on the payback terms stated ... xfer $30k of student loans to them.