What is a Non-Qualified Mortgage (Non-QM) and how does it help Southern California homeowners?
First, a brief history on what makes a mortgage loan product a “QM”, or “Qualified Mortgage.”
The Consumer Financial Protection Bureau (CFPB) is an independent agency of the government that was created by the Dodd-Frank Wall Street Reform Act of 2010. The CFPB basically has the authority to create guidelines for those mortgages that have originated in the primary mortgage market and subsequently bought by Fannie Mae and Freddie Mac. As such, a mortgage that falls within CFPB’s established Fannie Mae and Freddie Mac guidelines is referred to as a “qualified mortgage”.
Alternatively, a Non-QM loan is defined as any loan that falls outside of CFPB’s guidelines because it’s deemed to be “risky.” This definition includes loans that are above the county high balance loan limit, reduced income documentation loans, stated-income loans, as well as loans to borrowers that currently have over ten financed properties.
In addition to CFPB rules, another legislation that arrived from Dodd- Frank is the Volcker Rule, which, among other things, places restrictions on banks from receiving FDIC funds if it participates in any “speculative investments.”
What does this mean? It means that the big banks are out of the Non-QM home loan business, as it carries too much risk for the institution.
So why do we need Non-QM Loans? We need these loans because we live in Southern California. Our home prices are generally much higher that the rest of the country, and we have many well qualified self-employed borrowers that, despite being able to document income, are being unfairly prevented from purchasing a home based on QM underwriting guidelines.
We’re pleased to offer both QM and Non-QM loans. Contact us for more information on home loans for the self-employed, including stated income, business bank statements, asset depletion, pledged assets, and many more.
Chad Baker and his team are amazing!
My husband and I found Chad through an article he had written. Every aspect of working with Chad and his team was exceptional. From our initial phone call where he explained the many options we had, to advice he gave in dealing with somewhat challenging sellers, and closing our loan ahead of schedule, the loan process with Chad and his team went very smoothly. I especially appreciated the one-on one guidance from Juliann, who really made me feel like I was her only client. I look forward to working with Chad and his team again and would highly recommend them to anyone looking for a mortgage.
EXCEPTIONAL, SUPER EXCEPTIONAL! The most professional, accountable and committed mortgage service we have ever worked with. With numerous experiences in buying and refinancing homes, by far Chad Baker and his team remain at the top of our list. We feel very blessed to have located such a committed company who serve their clients with an exceptional first “first class” mindset.
I was referred to Chad by my Realtor for a purchase of a new house. The experience with Chad and the team (I mainly worked with Juliann) was nothing short of outstanding. From start to finish there were always quick to respond and when needed, notify me of any new documentation that was required. There were very helpful explaining to me the pros and cons of different financing options as well as some other loan related issues, such as termite clearance outside the purchase contact and septic tank certification process. Overall, very knowledgeable and processional team. Loan preapproval was done in a single day and loan documents were ready for signing in 21 days, which was 9 days ahead of schedule. That never happened to me before.