Best Wholesale Mortgage Lenders For Non-Prime Loans

Best Wholesale Mortgage Lenders For Non-Prime Loans

Gustan Cho Associates are mortgage brokers licensed in 48 states

In this blog, we will explain how Gustan Cho Associates goes above and beyond for their clients by having strong lending partnerships with the best wholesale mortgage lenders for non-prime loans with fair pricing on rates.  We will cover and discuss the difference between using mortgage brokers versus mortgage bankers. Joe Betro, a wholesale account executive at The Loan Store, has a national reputation for having the lowest conforming and non-QM mortgage rates. This is what Joe Betro said:

Mortgage lenders price mortgage rates based on layered risk levels. The higher the risk for the lender, the higher the rates. This is the reason why lenders with lower rates have strict lender overlays.

We will explain how mortgage brokers work with the best wholesale lenders for non-prime loans. We will cover the difference in how mortgage brokers work with the best wholesale mortgage lenders for non-prime loans. You will understand the difference between how mortgage brokers work with wholesale lenders versus the mortgage banking business model and how captive mortgage bankers work.

Working with Brokers Partnered with the Best Wholesale Mortgage Lenders For Non-Prime Loans

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We will explain the benefits of working with a team of mortgage brokers and wholesale lenders. Gustan Cho Associates is a mortgage company licensed in 48 states with lending partnerships with over 210 wholesale lenders. Gustan Cho Associates has a unique mortgage business platform.

Best Wholesale Lenders for Non-Prime Loans

The team at Gustan Cho Associates believes in honoring its reputation of being a one-stop mortgage shop. We pride ourselves on being licensed in most 50 states and having the most competitive mortgage rates in the nation due to being a broker and not mortgage bankers or correspondent lenders.

Our lending partnership with over 210 wholesale mortgage lenders enables Gustan Cho Associates, empowered by NEXA Mortgage, LLC, to offer unlimited mortgage options. Gustan Cho Associates has a reputation for being a one-stop mortgage shop due to having countless mortgage options on government and conventional loans, non-QM, and alternative mortgage loan programs, commercial loans, hard money loans, specialty loan programs for Heroes, and doctors’ mortgage programs.

After the loan is funded, the loan is sold on the secondary mortgage market or to a larger mortgage banker. Nondelegated correspondent lenders will sell the funded closed loans to the delegated underwriting mortgage bankers if they are in a nondelegated capacity. Delegated underwriting is when the mortgage lender underwrites the file. Nondelegated underwriting is when the mortgage banker underwrites the file. In this article, we will discuss and cover Wholesale Mortgage Lenders And Loan Program Guidelines.

How Do Mortgage Brokers Operate When Originating Loans

Mortgage brokers have business relationships with wholesale mortgage lenders. Mortgage bankers use their warehouse line of credit to originate and fund mortgage loans. Mortgage bankers do not have to disclose how much they make since they use their funds. Mortgage brokers need to disclose their compensation. 

Wholesale mortgage lenders make money using their funds or a warehouse line of credit and do not originate residential mortgage loans. Wholesale lenders count on licensed mortgage brokers to originate loans.

Once the loans are originated, processed, and closed, the wholesale mortgage lenders package them up and resell the mortgage loans to the secondary mortgage markets.

How Do The Best Wholesale Mortgage Lenders For Non-Prime Loans Operate?

Wholesale mortgage lenders are investors who do not deal with the public. Wholesale mortgage lenders count on mortgage brokers to originate loans and do not have a retail staff.

The retail sales arm of wholesale mortgage lenders is third-party licensed mortgage brokers. The maximum yield spread premium mortgage brokers can make capped at 2.75%.

The yield spread premium by mortgage brokers needs to be disclosed by mortgage brokers on the Closing Disclosure (CD).

Best Wholesale Mortgage lenders for NON QM Loans

Why Do Mortgage Brokers Have Lower Rates Than Mortgage Bankers?

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Correspondent lenders and mortgage bankers are exempt from disclosing their compensation on the Closing Disclosure. Correspondent lenders and mortgage bankers can charge whatever they want and substantially more than 2.75%. Most mortgage bankers will charge over 5.0% compensation or higher on the back end versus mortgage brokers’ 2.75% yield spread premium. This means mortgage brokers’ rates are substantially lower than mortgage bankers’ and correspondent lenders.

Why Do Mortgage Brokers Have Multiple Wholesale Mortgage Lenders?

Why Do Mortgage Brokers Have Multiple Wholesale Mortgage Lenders?

Many wonder why mortgage brokers have affiliate relationships with dozens of wholesale lenders. The reason is that every wholesale mortgage lender has its mortgage lending requirements and guidelines on top of the minimum FHA, Fannie Mae, Freddie Mac, VA, and USDA mortgage loan lending guidelines set by the GSE are called mortgage lender’s overlays.

What Are Lender Overlays By Mortgage Companies?

Overlays are mortgage lending guidelines and the minimum guidelines set by federal mortgage regulators. For example, to qualify for a 3.5% down payment purchase residential FHA mortgage loan, the minimum qualification is a credit score of 580. Although FHA requires a minimum of 580 credit scores to qualify for a 3.5% home purchase FHA loans, some wholesale mortgage lenders will require 620 credit scores. This is called mortgage overlays on credit scores.

A wholesale mortgage lender may have lender overlays requiring their mortgage loan applicant a minimum credit score of 640. HUD guidelines do not require a mortgage loan borrower to pay off unsatisfied open collection accounts. However, a wholesale mortgage lender may require that open collection accounts be paid off as their lender overlays.

Most banks have their overlays in not accepting any mortgage loan applicants that had a late payment after a bankruptcy, foreclosure, deed-in-lieu of foreclosure, or short sale. However, many wholesale mortgage lenders accept applicants with late payments after a bankruptcy, foreclosure, deed-in-lieu of foreclosure, or short sale.

Mortgage Brokers Offer Multiple Loan Options versus Mortgage Bankers

Mortgage brokers have multiple wholesale mortgage lenders because every mortgage loan borrower has a different credit and income profile. There are pros and cons with each wholesale mortgage lender. A mortgage broker’s job is to analyze and review each mortgage loan borrower’s credit profile and see where to submit the mortgage borrower to.

I deal with different wholesale mortgage lenders. After I analyze the mortgage loan borrower’s income and credit profile, I choose the best wholesale mortgage lender that best suits the needs of my borrower and where I expect a mortgage loan approval with no hiccups. Mortgage brokers can sign up with as many wholesale mortgage lenders as possible.

Wholesale mortgage lender A:  No overlays, DU and/or LP FINDINGS are all the requirements. Wholesale mortgage lender A has zero mortgage lender overlays. As long as the mortgage borrower has an approve/eligible per DU or LP Findings, that is the mortgage approval. Open collections are acceptable, and whatever the findings require, that is all they will go by. Why don’t I take every file there? The reason is it does take a little longer for a mortgage loan approval, and rates are higher for those with credit scores under 620.

Lenders For Bad Credit, Low Scores, With No Overlays

Manual Underwriting

Wholesale mortgage lender B:  Good mortgage rates for those under credit scores of 620 FICO but has overlays on collections. Lender B is a great wholesale lender for that I take files for those mortgage loan borrowers with limited open collections: This mortgage lender requires medical collections of over $10,000 to be paid and regular unsatisfied collections of over $7,500 to be paid. Mortgage rates are great for borrowers with credit scores under 620.

Mortgage Bankers Are Captive Lenders | Don’t Have the Luxury of Mortgage Options Like Mortgage Brokers

Wholesale mortgage lender C:  One-day mortgage approval and two weeks clear to close. Wholesale lender C is one of my favorite wholesale lenders. This is because I get a mortgage loan approval within 24 hours of submitting the mortgage loan file and can get clear to close within two weeks from the date of the mortgage loan approval. This wholesale lender has minimum credit score requirements of 640 FICO but also has debt-to-income restrictions. For any credit score under 680, the maximum debt-to-income ratio is capped at 45% DTI. The maximum DTI is 55%, but it needs credit scores of 680 or higher.

Manual Underwriting Guidelines

Mortgage brokers can partner with wholesale mortgage lenders that can do manual underwriting. Many mortgage bankers and correspondent lenders have lender overlays on the manual underwriters, unlike mortgage brokers, who can easily do manual underwriting due to their lending partnership with wholesale mortgage lenders.

Lenders Who Do Not Do Manual Underwriting

Not many correspondent lenders and mortgage bankers will do manual underwrites. Manual underwrites are needed for those mortgage loan borrowers who do not get an automated underwriting system approval.

Manual underwriting debt-to-income ratios are normally capped at 31% front-end debt-to-income ratios and 43% back-end debt-to-income ratios. The maximum debt-to-income ratio cap on manual underwriting is 50% DTI.

Verification of rent is required on all manual underwrites. Gustan Cho Associates will exempt rent verification for borrowers living rent-free with family to save money for their down payment on a home purchase.

Jumbo Mortgage For Low Credit Wholesale Lenders

I have affiliations with multiple jumbo mortgage loan lenders that offer up to 90% loan-to-value jumbo mortgage loans with no mortgage insurance required. The no mortgage insurance required jumbo mortgage loan program is called LPMI, Lender Paid Mortgage Insurance. LPMI mortgage loans are available for both conventional and jumbo mortgage loans.

Best Wholesale Mortgage Lenders For Non-Prime Loans on Niche Loan Programs

Mortgage brokers can partner with portfolio wholesale mortgage lenders specializing in alternative loan programs such as condotel financing and non-warrantable condo mortgage loans. Portfolio wholesale mortgage lenders are investors who hold the mortgage loans in their portfolio and do not sell them on the secondary market. Condotel and non-warrantable condo mortgage loans are portfolio mortgage loans, and so are unique property mortgage loans.

Non-Prime Bank Statement Mortgages For Self-Employed Borrowers

Gustan Cho Associates, empowered by NEXA Mortgage, LLC, is licensed in 48 states. Gustan Cho Associates has lending relationships with over 160 wholesale mortgage lenders and can help borrowers finance non-QM loans and bank statement mortgage loans for self-employed borrowers. There is no waiting period after foreclosure, deed-in-lieu of foreclosure, or short sale with non-QM loans. Self-employed borrowers no longer need tax returns with our bank statement mortgage loan programs.

How Mortgage Underwriters calculate Income

How Income Is Calculated By Mortgage Underwriters

Two years’ bank statements are averaged to derive income. Borrowers can use personal or business bank statement deposits. If personal bank statements are used, 100% of the deposits of the past 12 months are averaged. If business bank statement deposits are used, then 50% of the deposits are averaged over the past 12 months. A 10% to 30% down payment is required on non-QM loans and bank statement loan programs.

Some wholesale mortgage lenders have a reputation for being able to do government and conventional loans other lenders will not do. Gustan Cho Associates has three such wholesale mortgage lenders, specialty wholesale mortgage lenders on FHA, VA, and non-QM loans. The team at Gustan Cho Associates has to-go wholesale mortgage lender hot sheets for our loan officers.

Our loan officers can rest assured once they submit a loan to our preferred wholesale lenders who are on our hot sheet list, their clients will not just close but close on time. If the file is extremely difficult and marginally meets agency guidelines, the account manager will thoroughly review the file and will get a second opinion from the underwriters. Once we get a go-ahead from the underwriter, the file meets the agency guidelines, and that is when we issue the pre-approval.

Best Wholesale Mortgage Lenders For Non-Prime Loans with Lenient Guidelines That Make Credit Exceptions 

Types of difficult files our preferred wholesale mortgage lenders have closed for us at Gustan Cho Associates are FHA with 500 FICO, VA loans with credit scores down to 500 FICO, FHA and VA manual underwriting, FHA and VA during Chapter 13 Bankruptcy repayment plan, FHA loans with high collection accounts, VA loans with high collections and charged-off accounts.

Several wholesale mortgage lenders have a great team that works well together. They have the whole team, from the wholesale rep, the account managers, the disclosure desk, underwriters, the ops team, the closing department, and support staff is hands down one of the most professional groups with a business model that does not come close to mediocre wholesale mortgage lenders.

The most successful wholesale mortgage lenders are very close to each other. The team has a real concern for the borrowers. It does not matter whether it is late evenings, weekends, or holidays, every department member at successful wholesale mortgage lenders returns calls, and our loan officers will get emails with regards to the borrower’s file. This is why every file submitted to a top-notch wholesale lender will not just close but will close on time.

What Make A Successful Wholesale Lender That Runs Like a Well-Oiled Machine

Several wholesale mortgage lenders run like a well-oiled machine with a perfected business model that works 110%. There are no words of gratitude my team and I at Gustan Cho Associates have to say to these fine silent heroes who make our job as loan officers easier with less stress. Unlike other wholesale mortgage lenders, some select wholesale mortgage lenders have little to no lender overlays and normally go off the automated underwriting system findings (AUS).  The team at Gustan Cho Associates has been using wholesale mortgage lenders who always go above and beyond with five-plus services for many years. 

Reputation is of Consistent Excellence and Service

Mortgage brokers realize the great system certain wholesale mortgage lenders have as an everyday business model. No matter how busy these wholesale mortgage lenders get due to capacity, these reps and account managers always go above and beyond—many work after hours, on weekends, and on holidays. Questions and files of mortgage brokers are not just a deal or two to wholesale reps and account managers.

What Makes a Great Rep and Account Managers at Wholesale Lenders

What Makes a Great Rep and Account Managers at Wholesale Lenders

The best reps, account managers, support staff, and wholesale mortgage underwriters of wholesale mortgage lenders know that mortgage applicants are not just a number but families who are counting on them to close the home loan on time. The hard workers at wholesale mortgage lenders deserve a special thank you and appreciation for what they do for us as mortgage professionals and, more importantly, for borrowers. The whole team at wholesale mortgage lenders are truly silent heroes in the mortgage industry.

What Makes a Wholesale Lender the Best of the Best is the People Who Work Together to Make the Deal Happen

From the disclosure desk team to the processing and underwriting team, the staff of the closing department, and other support/operations teams, they all work together to make the dream of homeownership come true for the borrowers of mortgage brokers. It is the people that make a company.

Great professionals go above and beyond who make a great mortgage company.  Mortgage brokers count on wholesale mortgage lenders. It is a true dream team of mortgage brokers to have great wholesale mortgage lenders who want great competitive rates, great products, and great competitive mortgage rates. Special thanks to our great, hard-working mortgage professionals who work at our top wholesale mortgage lenders.

Wholesale mortgage lenders compete with other wholesale lenders to earn business from mortgage brokers. For example, why does the team at Gustan Cho Associates submit most of our files to one wholesale lender versus a different one? One wholesale mortgage lender may not come close to a different wholesale lender to have the service and knowledge. We will use a wholesale mortgage lender where the rep is available 7 days a week, on evenings, weekends, and holidays via cell, text, email. Some wholesale lender reps and account managers are a Godsend and go above and beyond others. The team at Gustan Cho Associates has been extremely grateful to a select few reps and account managers of wholesale mortgage lenders assigned to us exclusively to our team.

Mortgage Brokers Prefer Service Over Pricing From Wholesale Mortgage Lenders

Loyalty exists between mortgage brokers and wholesale mortgage lenders. Most mortgage brokers will choose a loyal wholesale rep with a slightly higher rate and are available seven days a week with great service over a wholesale lender with a lower rate and lower level of service.

Whatever better offer mortgage brokers may have from the competition wholesale lender, such as slightly better pricing, or other incentives, the wholesale lender with better service will always win the business many times over. Mortgage brokers represent their homebuyers as their clients. Wholesale mortgage lenders’ clients are mortgage brokers.

Service always wins. Wholesale mortgage lenders with great service are the lender of choice. Mortgage brokers cannot afford to lose the faith and trust of realtor partners and borrowers by not being able to meet the closing dates. Wholesale mortgage lenders with great professionals working for them will always have loyal mortgage brokers be loyal to them. This is because mortgage brokers will never worry about the borrowers’ file closing on time. The staff will do everything possible to meet every closing date by working late or on weekends to make it work. Why risk getting a bad review because a wholesale lender disregards the borrower? 

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