Becoming An Alchemist With Becoming An Alchemist With MortgagesMortgages

By Robert RatimorszkyBy Robert Ratimorszky

What is an AlchemistWhat is an AlchemistAccording to Merriam Webster an According to Merriam Webster an

Alchemist is someone that Alchemist is someone that practicespractices

Alchemy which is the power or Alchemy which is the power or process of transforming something process of transforming something ordinary into something special or ordinary into something special or in this case transforming no loan in this case transforming no loan

into a loaninto a loan

Today’s ObjectivesToday’s ObjectivesWhy deal with challenged credit Why deal with challenged credit clients.clients.We will be looking at three specific We will be looking at three specific cases where we were able to turn cases where we were able to turn loans that at first looked like no deals loans that at first looked like no deals into deals.into deals.How you can use these techniques to How you can use these techniques to turn those challenged credit clients turn those challenged credit clients into a very profitable loans.into a very profitable loans.

Why Deal with Challenging Credit Why Deal with Challenging Credit Clients?Clients?

Satisfaction of helping a person that really Satisfaction of helping a person that really needs your help.needs your help.They are a captive audience most They 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 of It’s like riding a bike once you do a few of these loans they will become second these loans they will become second nature.nature.There are less originators going after There are less originators going after these clients, why because they are not these 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 DidDid some research into loan programs.Did some research into loan programs.Inviting the account reps into the office Inviting the account reps into the office where they walked me through there where they walked me through there online pricing and underwriting systems.online pricing and underwriting systems.It is very simple to learn and can take all It 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 manual Another type of business is FHA manual underwrites.underwrites.

What I DidWhat I DidKept it simpleKept it simple

– We did not want to use to many lenders We did not want to use to many lenders which reduced confusionwhich reduced confusion

– I figured that if I got to know two or I 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 best I got tired of constantly chasing the best deal.deal.

– They offered the least amount of They offered the least amount of headaches when it came time to get headaches when it came time to get underwriting conditions from the client. underwriting conditions from the client.

Why I Picked ThemWhy I Picked ThemEasy to use online pricing and Easy to use online pricing and

underwriting enginesunderwriting engines– Simple online underwriting similar to DO Simple online underwriting similar to DO

or LPor LP– Wide range of products that cover most Wide range of products that cover most

sub prime lending.sub prime lending.– An account executive that knows there An account executive that knows there

programs and can look at a scenario and programs 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 FileWhat 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 Executive After consulting with Account Executive – We were able to take him off the loan and go We were able to take him off the loan and go

stated 100%. stated 100%. – Mind you she is a daycare director making Mind you she is a daycare director making

about 25,000 a year we stated her income at about 25,000 a year we stated her income at 5750.5750.

– Steve helped me structure the deal to make it Steve helped me structure the deal to make it work.work.

Sample File Rate and Term Sample File Rate and Term RefinanceRefinance

Main challenge income and credit Main challenge income and credit scores.scores.

Worked for Target as a store Worked 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 spread Came up with a better yield spread then previous lenderthen previous lender

Sample FHA Manual UnderwriteSample FHA Manual Underwrite

ChallengeChallenge– Low credit scores with minimal credit Low credit scores with minimal credit

historyhistory– No rental historyNo rental history– No assetsNo assets– Self employed prior to Nov 2005 most Self employed prior to Nov 2005 most

lenders wanted 05 W-2 or tax returns he lenders wanted 05 W-2 or tax returns he only made 12,000 last year.only made 12,000 last year.

Why FHAWhy FHACredit scores do not matterCredit scores do not matter

A good LOX in many instances will go a A 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 ConclusionBe patient the first loan WILL take you Be patient the first loan WILL take you longer to get through.longer to get through.Be patient with the clients they are new to Be patient with the clients they are new to the process and are not as educated as a the process and are not as educated as a 700 borrower.700 borrower.Remember not to over promise and under Remember not to over promise and under deliver. deliver. Explain to the client what you are doing Explain 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 fees Then you will be able to dictate your fees on these loans and will not have to worry on these loans and will not have to worry about getting squeezed by your borrower.about getting squeezed by your borrower.