Wholesale Mortgage Lenders And Loan Program Guidelines

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Wholesale Mortgage Lenders And Loan Program Guidelines

This BLOG On Types Of Wholesale Mortgage Lenders And Loan Program Guidelines Was UPDATED On October 9th, 2018

What are Wholesale Mortgage Lenders And Loan Program Guidelines

The Gustan Cho Team at Loan Cabin Inc. are national direct lenders with no mortgage overlays on government and conventional loans. Gustan Cho Associates at Loan Cabin Inc. are also correspondent lenders and partner up with dozens of wholesale mortgage lenders. We underwrite and fund the loans and resell them to wholesale mortgage lenders.

Mortgage brokers have business relationships with wholesale mortgage lenders.

  • Wholesale mortgage lenders make money by using their own funds or a warehouse line of credit in originating residential mortgage loans
  • They then package them up and reselling the mortgage loans to the secondary mortgage markets
  • Wholesale mortgage lenders are investors who do not deal with the public
  • Wholesale mortgage lenders only deal with licensed mortgage brokers and mortgage bankers

Why Do Mortgage Brokers Have Dozens Of Wholesale Mortgage Lenders?

Why Do Mortgage Brokers Have Dozens Of Wholesale Mortgage Lenders?

Many wonder why mortgage brokers have affiliate relationships with dozens of wholesale mortgage lenders.

  • The reason being is because every wholesale mortgage lender have their own 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 which are called mortgage lender’s overlays
  • Overlays are mortgage lending guidelines that are in addition to 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 3.5% home purchase FHA Loans, some wholesale mortgage lenders will require 620 credit scores
  • This is called mortgage overlays on credit scores

Mortgage Lender Overlays Imposed By Wholesale Mortgage Lenders

What are Mortgage Lender Overlays Imposed By Wholesale Mortgage Lenders

A wholesale mortgage lender may have lender overlays of 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 own 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, there are many wholesale mortgage lenders who do accept mortgage applicants with late payments after a bankruptcy, foreclosure, deed in lieu of foreclosure, or short sale
  • The reason mortgage brokers have multiple wholesale mortgage lenders is 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.

Specialty Wholesale Mortgage Lenders

Who are Specialty Wholesale Mortgage Lenders

I deal with various different wholesale mortgage lenders and after I analyze the mortgage loan borrower’s income and credit profile, I choose the best wholesale mortgage lender that best suits the needs for my borrower and where I expect a mortgage loan approval with no hiccups.

Here are a few wholesale mortgage lenders who I deal with.

  • Wholesale mortgage lender A:  No overlays, DU and/or LP FINDINGS are all the requirement:  
    • 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
  • 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 that I take files for those mortgage loan borrowers that have limited open collections
    • This mortgage lender requires medical collections over $10,000 to be paid and regular unsatisfied collections over $7,500 to be paid
    • Mortgage rates are great for those mortgage loan borrowers with credit scores under 620
  • Wholesale mortgage lender C:  One day mortgage approval and two week clear to close: 
    • Wholesale lender C is one of my favorite wholesale lender because I get a mortgage loan approval within 24 hours of submitting the mortgage loan file and can get a clear to close within 2 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
    • Any credit scores under 680 the maximum debt to income ratios are capped at 45% DTI
    • The maximum DTI is 55% but need credit scores of 680 or higher
  • Manual underwriting wholesale lenders: 
    • Not too many wholesale lenders 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
    • Maximum debt to income ratio caps on manual underwriting is 50% DTI
    • Verification of rent is required on all manual underwrites
  • Jumbo mortgage loan 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
  • Portfolio mortgage lenders:  Condotel mortgage loans and non-warrantable condo mortgage loans: 
    • Portfolio wholesale mortgage lenders are investors who hold the mortgage loans in their own portfolio and do not sell them on the secondary market
    • Condotel mortgage loans and non-warrantable condo mortgage loans are portfolio mortgage loans and so are unique property mortgage loans

Non-QM Loans & Bank Statement Mortgages For Self Employed Borrowers

What is Non-QM Loans & Bank Statement Mortgages For Self Employed Borrowers

The Gustan Cho Team at Loan Cabin Inc. are correspondent lenders on non-qm loans and bank statement mortgage loans for self employed borrowers.

  • There is no waiting period after foreclosure, deed in lieu of foreclosure, short sale with non-qm loans
  • Self employed borrowers no longer need tax returns with our bank statement mortgage loan programs. Two years bank statements is 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 24 months is averaged
  • If business bank statement deposits are used, then 50% of the deposits are averaged of the past 24 months
  • 20% down payment is required on both non-qm loans and bank statement loan programs

Home Buyers who need to qualify for mortgage with a national direct lender with no mortgage overlays on government and/or conventional loans can contact us at The Gustan Cho Team at Loan Cabin at 262-716-8151 or text us for faster response. Or email us at gcho@loancabin.com. We are available 7 days a week, evenings, weekends, and holidays.

By Gustan Cho

www.gustancho.com

1 Comment
  1. Thomas Jameson says

    It’s good to know that every wholesale mortgage lender has their own mortgage lending requirements. My wife and I would like to take out a mortgage on our house, and we’re evaluating our options. We’ll be sure to keep wholesale mortgages in mind as we continue to look around.

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