Underserved Homebuyers Aren’t Underqualified – They Just Need The Right Lender With The Right Loan Products. Learn What That Means!

Underserved Homebuyers Aren’t Underqualified – They Just Need The Right Lender With The Right Loan Products. Learn What That Means!

Today we talk about borrowers who are turned away and the growing number of Agency fall-out deals. Hear about actual loan scenarios that include the largest overreaching categories of non-QM borrowers: self-employed, real estate investors and those who are credit challenged. Many of these homebuyers have A-paper profiles and can show their ability-to-repay their loan, they just miss traditional Agency guidelines.

Our guests, Licensed Mortgage Advisors Chris Philmon and Tim Horst, know first-hand how to help these people because they close these loans every day. They share loan scenarios, the challenge and the loan product that saved the deal. They also explain how non-QM products give borrowers more purchase power.

This podcast is a great one for Realtors, originators, builders and homebuyers – don’t think a challenge means it’s not possible to qualify for a home loan. Educate yourselves on loan options you might not know exist!

Today we talk about borrowers who are turned away and the growing number of Agency fall-out deals. Hear about actual loan scenarios that include the largest overreaching categories of non-QM borrowers: self-employed, real estate investors and those who are credit challenged. Many of these homebuyers have A-paper profiles and can show their ability-to-repay their loan, they just miss traditional Agency guidelines.

Our guests, Licensed Mortgage Advisors Chris Philmon and Tim Horst, know first-hand how to help these people because they close these loans every day. They share loan scenarios, the challenge and the loan product that saved the deal. They also explain how non-QM products give borrowers more purchase power.

This podcast is a great one for Realtors, originators, builders and homebuyers – don’t think a challenge means it’s not possible to qualify for a home loan. Educate yourselves on loan options you might not know exist!

Welcome to Your Mortgage Matters brought to you by Angel Oak Home Loans, your weekly look into what’s new in the mortgage business and how it impacts you. And now your host, Michael Chabot.

Michael Chabot
Hey guys, welcome back to another episode of Your Mortgage Matters. I’m your host Michael Chabot. And today we are going to talk about the largest overreaching categories of non QM borrowers self employed real estate investors and those who are credit challenged. Our guest today know firsthand how to help these people because they close these loans every day. Each mortgage professional is going to share a loan scenario, the challenge and the loan product that save the deal. Before we get into it, let me introduce my guests. So first and foremost, Chris Philmon. Chris is a licensed mortgage advisor with over 20 years of experience in the mortgage industry. As a resident of the metro Atlantic area for 19 years. He has a solid understanding of the local real estate market and maintains excellent working relationships with clients, builders and realtors. One of the things he loves most about Angel Oak are all the innovative mortgage loans we offer through our non QM portfolio suite of products that allow him to help more underserved borrowers. Tim Horst after graduating with a Bachelor of Science and finance from Drexel University, he spent nearly 10 years in the Marine Corps. As a Marine Corps veteran. He knows the challenges and stresses of home buying and relocation over time, it says he has learned to overcome as he’s come to learn, excuse me his true passion. Helping clients not only realize their dreams, but help them achieve their homeownership goals. Gentlemen, welcome to the show.

Tim Horst
Thanks for having us.

Michael Chabot
It’s my pleasure. Tim, that’s awesome, man. Thank you for your service in the Marine Corps.

Tim Horst
Thank you.

Michael Chabot
So gentlemen, we’ve talked about this a lot on other episodes, which is what makes Angel Oak a unique company in the mortgage industry. You know, there’s a lot of things but this one, we really wanted to focus in on our non QM our portfolio products, the things that we have out in the marketplace, that helps those especially I want to talk about first and foremost, self employed borrowers. They truly are an underserved section of the market, as we know, with traditional lending, the way that it’s set up in in this country, self employed borrowers get penalized, don’t they? Oh, yeah. Yeah. So a couple of stats, and then we’ll get into it. So. So bank statement loans are typically the biggest loan we use for our self employed borrowers. Some stats here, self employed borrowers represent a large population of people under served from a mortgage credit perspective for many years, as I said, because of the loopholes in the tax laws, they’re allowed tax deductions. A lot of them are 1099 income work earners, needing need to use earning statements in lieu of tax returns. And again, we’ve talked about this on other shows is that your tax return really isn’t supposed to show what your income is, it was a tool device to show what your tax liability is. And for some reason, here in the mortgage industry, we’ve adopted the tax return as a way to show income last in the stats, and then we’ll get into it. large population represents a lot of potential homebuyers slash borrowers. 59 million US employees categorized as self employed and gig economy workers according to Upwork. That accounts for 36% of all employees in the US. So what I’d like to do is start with each one of you. I’ll go Chris, first. Talk about your marketplace right now, what you’re seeing, and how many self employed borrowers do you think you guys serve on a monthly or annual basis?

Chris Philmon
Hi, everybody. This is Chris, I primarily sell myself in the marketplace as being the self employed expert. Ways in which I do that is if I’ll get fallout from other lenders, because they know that if they call me I’m not going to necessarily go after the referral source. But always start with reviewing the tax return first to make sure that it has not it has been reviewed fully. There’s been times before where I’m referring to bank statement loan, and then I go look at the tax return, I’m like, Well, if we look at this, or if we add this schedule, or this or that, we’re able to turn it we’re able to keep that loan and a conventional type space or full doc type space. So since I get a lot of self employed, I’d say probably about 40% of my pipeline is self employed because self employed no other self employed people, when you’re the specialist for that, it, it becomes something that people are going to quickly seek you out on. We have different flavors of it too, whether it be to 12 months, 24 months, we can highly customize the product based on somebody’s scenario. And it’s really neat to have the full doc with the self employed bank statement type product because it allows us to pivot midway through an underwriter if necessary to go non to him if we started going QL

Michael Chabot
Sure. That’s awesome. So So Tim, real quick. I failed to mention I apologize. You’re out of North Carolina, correct?

Tim Horst
Correct.

Michael Chabot
So you’re serving the North Carolina area. So talk to me, same thing about Your marketplace trends you’re seeing what percentage would you say of self employed borrowers? Do you think you help?

Tim Horst
Yeah, so I think Chris hit the nail on the head, there’s so many clients who come to us for the portfolio products, and then you take a look at the tax returns, and you realize that somebody else just missed the slam dunk for conventional loan, you know, I would say, probably 50% of the loans who come that come to me for a portfolio loan, we end up looking at it. And it’s either you know, it’s a non warrantable condo, or it’s a self employed person with 555 pages of tax returns, that once we actually dive into it, it’s a slam dunk conventional loan. So we get a lot of self employed borrowers who come to us I think, because the, the other I guess, lender, or whoever they were working with, kind of figure it out. And we have, we’ve got such a robust team, from the income calculation side, who is really able to get the most bang for the buck for the borrowers from an actual self employed borrower standpoint, probably, you know, we’re in southeastern North Carolina, so we have a lot of military. But the from the self employed side of the house, probably 20 to 25% of our pipeline is our self employed for bank statement loans or other products, we do a lot of investment work as well, which I think we’ll talk about a little bit later. But, you know, this product suite that we have allows for flexibility, which is the best part about it, is a client comes to us, usually in a bind, and we’re able to present multiple options to them through the products, we be a bank statement, loan, investment, loan, investor, cash flow loans, or being able to dive deeper into those tax returns, and and get them qualified.

Michael Chabot
Yeah, great stuff. And, you know, you guys both brought up a good point, which is, not all loan officers are created equally. And, you know, most people think today, and we’re not allowed to say any names here, but a lot of people think it’s getting a mortgage, as you go on your phone, you fill out an application, and you have an approval. And we all know that for some borrowers, it’s very simple process, it really is, you know, if they’re just a straight w two with no other properties, etc, clean credit, it can be a very simple process. But as the three of us know, that every borrower and I always like to say this is like a fingerprint. They’re unique. Everybody has their own unique situation. And I love that you both brought up the fact that sometimes there’s loans that are turned down elsewhere, that you get your you analyze it and say no, actually, we can do a normal conventional loan, we don’t need to go to a portfolio product. But doesn’t it feel great gentlemen, to have those arrows in your quiver, as they say, to be able to when you get a deal that you say, Yeah, you’re right. We can’t do a typical loan, a conventional loan, but we have this suite of products, we can put you in and you can still buy your dream home. Right? Yeah. So let’s talk about this really is all about sharing some stories of people we’ve helped through the unique product suites that we have. So let’s start out with with our bank statement loans, Endor, 1099 loans. And I’ll go to you, Chris, tell us a situation or story about maybe a deal you came in and saved or somebody who thought they couldn’t get a loan and you were able to do it for them.

Chris Philmon
There’s plenty that I’ve got like that. I mean, case in point, I’ve got one that we’re working on right now, actually, this fresh in my mind, because it’s closing next week. It’s an individual that got a call the day before Thanksgiving, as the loan was falling out conventionally. He was self employed, but also had another job as w two. Something happened with the W two to where they can no longer underwrite it to that, I don’t know if he lost the job. I don’t really know what the situation was there. I don’t know if it was underwritten correctly, really with a self employment or not. So he calls me we get the loan really started glatt at the beginning of last week. And so we’ve been moving at a lightning speed on this. But it was best for us to take a look at this bank statements. He had a he also had a divorce last year towards the end of the year, had a company’s had a certain name before that at the end of the divorce. He changed names just to have a fresh start on everything. So we got to the bank status for the last 12 months. On top of that another unique feature is we will allow gift funds for that product as long as the borrower’s putting down their initial 5%. And so his mother’s willing to step in and help him because the deposits aren’t that aren’t as strong as what he thought his taxes would have been with a W two. But we are able to piece together a loan for him. It wasn’t as much as he thought it was going to be but it is going to be enough to add with his debt, that along with his down payment, and then a gift from his mother He’s going to be able to close on it next week. And he’s pretty excited about

Michael Chabot
It’s a great story. So there’s an example of how we were able to come in and save the day. All right, Tim, how about you?

Tim Horst
Yes, I think one of the greatest benefits that a lot of folks don’t even realize about the bank statement loan program is that you can couple the bank statement income with w two income. So I’ve got got one going on right now, where we thought was, it was going to be a straight conventional mortgage with the and also actually, it was going to be a jumbo jumbo loan that he wouldn’t be able to qualify under normal jumbo qualification, because he had a bankruptcy discharged just over four years ago. So we were able to slide it in, get him a jumbo loan without having to wait that seven years. So when we went through, and we did just a straight income calculation, because we thought we’re going to be able to use our Platinum program, the tax return income for his consulting business came in at I think it was a little less than 10% of what it actually is, from a bank statement income perspective. So we thought we were gonna have to initially turn him down, we’re able to pivot to the bank statement program, calculate his income to be six times what it would have been from his tax return. Couple that with his significant w two income, and that was a slam dunk again, approval. So again, like you’re just a lot of folks, I think your bank statement loan and think, Oh, we’re just calculating off the bank statement. But being able to, to couple those two income streams together is a huge benefit for the clients.

Michael Chabot
I agree. And I’ll share one of my own recent stories quickly. I had a I have a client who is a financial planner, and he gets paid basically, at the end of the year via a 1099. And so through our bank statement program, as you both know, we have a 1099 option. And he was he had been basically turned down, it’s a jumbo loan, he was buying in Southern California, three and a half million dollar purchase. And he had been turned down by everybody in the land, he makes seven figures a year. And we were able to with a 1099 loan, we did a one year 299 loan, we’re able to come in and get the loan done from enclose it in like 20 Some days. So it’s, it’s awesome that we have these products, right? Because we can pivot like you both shared in your stories, we can pivot. And in most cases, we can help somebody close the gap or figure out another way to get in and get them their home that they you know, want for themselves in their family. So this is good stuff. And it’s again, you know, what I like guys, as you both shared in your stories, is that exactly what I said is, mortgages aren’t simple, right? That takes a lot of work. You have to really peel back all the layers and see what’s there and see what you have on how to put it together. So I want to talk I know Tim, you touched on jumbo and I know that before we started recording Chris, you said you had a really good jumbo one. So let me throw out a couple of jumbo stats guys. And then we’ll get into a couple of jumbo scenarios. So jumbo mortgages account for 12% of all purchases and refinance. It’s an increase of five and 5.25% Excuse me over last year at this time, according to property and mortgage data aggregator Blacknight Inc. The National Association of realtor reports that home sales price over a million dollars increased 244% year over year in May. That’s huge. Lawrence Yun is the chief economist at the National Association of REALTORS stated that this is because wealthier Americans have benefited greatly during the pandemic, thanks to the rising stock market, which typically grows net wealth. So there is greater demand for luxury housing now. Real quick, almost done. Joe Kahn, the MBAs associate vice president of economic and industry forecasting stated that credit availability slightly increased in July, driven by an increase in jumbo loan programs. The overall gain was despite another month of pullbacks and high loan to value refinance programs due to the GSE policy changes, which is Fannie and Freddie. And they all believe that this trend, by the way in the jumbo market will continue through 2022. So before I get into who we saved, and I both love for you to answer, we’ll just go in order, Chris first, and then Tim, have you seen jumbo demand grow in your marketplaces? Is it prevalent there?

Chris Philmon
Yes, very much so.

Michael Chabot
So you’re seeing it grow in your market, Chris?

Chris Philmon
Yes. I mean, even if you just look at year over year average size loans, that from our volume, I mean, it’s increased. Probably about about $50,000 year over year for the last three or four years.

Michael Chabot
Yeah, that makes sense. And Tim, how about in your marketplace?

Tim Horst
Yes, it’s our marketplace. Are I’m located in Southeast North Carolina and Wilmington. Now, median home price here is probably about $250,000. But we are right on the coast. So we’ve got a very, you know, once you get on the water, the house prices jumped very quickly. But but so we were seeing home prices continue to appreciate crazy levels. So I would say yeah, I mean, waterfront properties for sure we’ve ever seen a lot more. A lot of folks moving from the Northeast are buying investment properties or second homes along on the coast. So absolutely.

Michael Chabot
Yeah. And I read yesterday, Lawrence Yun, who I talked about, who’s the chief economist that national association Realtors is predicting in 2020, to at least another 10 to 15% growth in prices. So the demand is there. I think, before we get into that, I want to ask you guys most of this question is, is supply short in your marketplaces like it is here? Not many listings hitting the marketplace? Chris, go ahead. You can answer first.

Chris Philmon
Yeah, yeah, there’s the supply chain, or this, the housing supply was already was already low pre pandemic. And it’s just gotten worse. One thing to kind of show one thing to kind of show that is this year, I’ve had more people pay over appraised value without batting an eye than I’ve had and the other 19 years in the business collectively. It is not it is not even up for discussion. I mean, it’s just it’s a matter of doing business. Now, if the property is short, it’s just it’s just a matter of how much are they going to pay over the appraised value. And they don’t even have that doing that. And something else we are we were already short on before pre pre pandemic was new construction. New construction is very desperate, disparate here, the in the new country. And because of that the new construction median price here in the Atlanta metro area, I would say in the last three or four years is probably $250,000 More than where it was before.

Michael Chabot
Wow, that’s a huge growth in price. So Tim, how about in your marketplace? Are you guys still seeing? You know, very low inventory? Not a lot of houses hit the market?

Tim Horst
Oh, yeah. I mean, they can’t build houses fast enough. We’re, especially at certain price points, you know, the higher price points once we get into the jumbo spaces above the five $600,000 Those houses are still going quick. But anything around here below three to $400,000. Good starter home range. And below. Literally every every home is a 20 plus offer scenario. So that’s where you know, it’s it’s a it’s a battle every day for the for the clients. And I mean, I’ve got so many clients who just decided to build, because it’s that much easier to just then plan it out and build over time as opposed to trying to compete because they’re looking at 15 houses a day putting 15 offers getting turned down 15 times. So it’s it’s definitely a problem throughout the country.

Michael Chabot
Yeah, agreed. We’re seeing that I’m licensed in several different states. And I’m seeing in every market where I do business here in Colorado, where my home base is now I’m seeing what you’re seeing Tim a lot of my clients are buying land and building because they’re just tired of you know, they’ve written 15 or 20 offers and have missed out. Chris, you brought up an interesting thing. And I had a scenario recently where it was a low downpayment borrower got into escrow, they waive the appraisal. And but we did not get an appraisal waiver from Fannie or Freddie. And of course, the property came in a little bit light. And it’s a tough situation because as we know, they can waive the appraisal as part of the purchase contract. But if an appraisal is required, we need that appraisal as part of our condition to close the loan. And so thankfully, we were able to get it done and bridge the gap and get it closed. But it’s a it’s an interesting market. You know, I think it’s it’s definitely different than any of us have seen in our careers. Oh, yeah. Yeah. Alright, so let’s talk about I know Chris, you said you had a jumbo that you had come in and save the day. And so let’s let’s hear about that.

Chris Philmon
Yeah, this was actually a few months ago, I had my turn one of my main closing attorney, she called me and she said, Chris, I think I have a loan that’s about to go south bad. I said, Okay, well, what’s the scenario and long story short, there’s a he’s a commercial real estate broker here in town and makes really, really good money. Well in 2000 2019 2019 he added down here, we first got referred this deal prior to April of this year. So the 2020 tax returns hadn’t been prepared. He wasn’t even near the ready for those. So once I got my hands on it, she said, I know if this needed to go non-QM, you guys with guys to take a look at this. And basically the other company, they thought they can make heads or tails on declining income, from 2018 to 2019, he made about a million in 2019 3 million in 2018. And made somewhere in the four LO 400,000 range and 2019 pretty big gap, right. But if you average the two years, it would have made sense because he was spending he was buying 1.4 Or five is a lease purchase. He had been living there about six years when he was so when they call me and said, Hey, we think we need you to save this, I have to take a look at it. I got to talk in with the borrower. And I said I think we can save it, but we’re gonna have to wait for his 2020 taxes to be filed. Because the 2019 We’re not going to work. We talked about his about what his numbers were going to look like for 2020. And then I pivoted or actually I really just started with the one year platinum jumbo tax return. And so he ended up having to take a hard money loan, double digits on 1.1 million and change. Pay five points for that. And he was he was desperate enough to do this, because the house, when he had originally put it under contract years ago is for around 11314. So in today in today’s market, it was worth, you know, north of one, seven. So because of all of this built in equity, he was able he thought it was still wise to go ahead and close with hard money. We went through the summer, there was some things that came up and getting that tax return prepared. But we were able to go ahead, get that loan approved when your tax return platinum jumbo, nobody else would have had this product, he stayed engaged the full the whole time. And we were able to record closing quarterly. So we went from, I think it was around a $38,000 a month payment with taxes and insurance to about 11. And he is making about a million dollars a year so that it’s not that big of a payment to him. But he was extremely, extremely thankful that we were able to put him in the house. And the neat thing about it is though too, even though that was platinum jumbo, that’s going to probably turn into a prime jumbo it looks like sometime next year after he files his 2021 returns, because then we combined the 2020 with the 2021 We’ll have our typical two year tax return as needed for a real Jumbo. And that’s not one loan and now becomes two loans.

Michael Chabot
That’s awesome. That’s a great story and what a huge savings for him. Love that kind of stuff. Tim, do you have a jumbo story?

Tim Horst
Yes, I got a jumbo gold story. So that’s a huge win for us being able to go above the 45% back end. And basically scenario we had was it was a slam dunk regardless, in borrowers gonna qualify for a normal jumbo loan, unfortunately, the sale of their primary residence fell through and got delayed. So having that ability to go up to the 50% back end DTI, we’re able to actually push the loan through and approve them because we had that extra extra capability without having to sell their other home. So that was one of the biggest ones because I think that the Gold program came out mid summer. And having that when we started the loan process, I don’t think it was even fully up and running. But then being able to go to that 50% back end. You know, they sold the house a month later, but they didn’t have to delay their move or delay any of the other closings for their primary residence purchase for their new home because of the the ability to go to the gold.

Michael Chabot
Yeah, that’s awesome. And a couple things for those of you listening Excuse me. So typical jumbo loans require what’s called a 43% debt to income ratio, or as we say in the business of back end. That basically just means the new housing payment, all your other debts divided by your income. We have a proprietary program in house that we call our jumbo gold that allows for a 50% debt to income ratio. Obviously, I have to give you a disclaimer listening to this you have to have certain credit scores and certain things you have to meet doesn’t mean everybody can get this loan. But if you do qualify for it, it is a wonderful program. That gives us as I like to say just a larger box to operate in to help more people, especially with all the stats that we talked about gentlemen with the jumbo market growing and being more prevalent. I have a quick one that I’ll share. My top referral realtor partner called me at the last minute they got into escrow with a client basically the the other lender issued a pre approval Based on his 18 and 19, taxes being filed, and the lender told him, Hey, you know, I’m going to need 2020, as long as it’s the same or better, as far as what you’re filing will be good. Of course, they got halfway through the escrow period, he filed his taxes. And he went from showing a large six figure income on the taxes to a large six figure loss. And so of course, now they don’t have a loan. So we were able to step in, we did a 12 month bank statement loan, and we were able to get it closed in about 14 days. And so, and I can’t tell you rates and stuff like that on this show, but I can tell you that it was still a very competitive, very attractive interest rate. And everybody was extremely happy. And so this is one of the great things about being involved with an organization like Angel Oak, is that we just have so many ways that we can help people. And, you know, as you both know, if you’re on the call yesterday, what I love is we’re continuing to grow, we’re continuing to add more product, we’re able to help more people. Alright, let’s talk about a fun one, which I love this program, which is investor cash flow. A couple of quick, you know, stats, again, I have some stats here. And we’ll go through this one real quick is, as we know, investor stuff has grown tremendously, right, there’s a huge demand, borrowers are buying more and more investment properties. And of course, doing these loans, some of these borrowers, they could own more than 10 properties, more than 10 financed properties, excuse me, lots of documentation required, right? If they own, you know, I had one guy, he owned 25 properties. I said, There’s no word going investor cash flow. But if you as you guys know, and for those of you listening, if you own 25 properties under a traditional loan product, you have to have all of that documentation, you have to have the leases, you have to have the tax returns, you have to have the mortgage statements, if there’s mortgages, there’s a ton of documentation. We call it the investor cash flow loan. And it’s it’s such a great program. For those that want to buy an investment property, it really does streamline the process. I’m guessing that both of you have experience with this wonderful product. And Chris, I’ll let you go first, any stories you want to share about the investor cash flow loan?

Chris Philmon
Oh, yeah, plenty. This is, by far what I feel out of our entire suite of products, the easiest loan to underwrite. Primarily, because you’re looking at a credit score, you’re looking at LTV, and then you’re looking at the loan, really not even going into underwriting until you have the appraisal in hand. The rates are they can be a little bit higher than your traditional conventional, but is the ease of service that’s really that allows us to get these loans and get them out. Oftentimes, if it’s an investor, they if it’s their first or second home, they may not get it. If it’s their third, fourth, fifth to 25th. They do want an easy process because they’re more interested in getting that home off the market and putting it in their portfolio with a richer in anything else. I mean, where do I begin? I mean, I’ve got some borrowers that that come to me that they know that’s the only product we’re going to talk about. We don’t talk about conventional. We don’t talk about any other types of products to say alright, we’re we’re going to be on this because they do understand the whole piece as far as the debt service coverage ratio is going to is concerned for the underwriter, you know, is going to be bringing me more income than they would have sitting on each month, I just had a call actually, before this meeting. One of my best one of my most one of my clients, I’ve done the most loans for this will probably be his in the last three years. This will probably be his ninth loan. And about three loans ago, we started doing investor cash flow only because he’s a jeweler. He owns a very successful company. He’s and he’s traveling around this at the other has that all the paperwork as it relates to three different businesses within the jewelry company. And so after the first couple of times, I told him I said, Listen, you’re you’re busy. I know this is hectic for you, it’s even more hectic for us. Can we just go with this product, you know, something else about investors too is is once they find out we have that product you kind of become the only person they’re going to come to because we have a conventional that they want to go that way if we can make that work. But if we didn’t, you know if we have other product like this as well. And you’ve taken care of them once or twice you built that that that know like and trust relationship with them. So they say all right, whatever you say, Chris that’s that’s what we’re gonna go with.

Michael Chabot
Yeah, love it. So Tim, how about yourself?

Tim Horst
Yeah, absolutely. So I’ve got, you know, we do a fair number of these as well work with a good good number of people. answers and one that pops into my mind first is actually similar to the story Chris just told, with regards to, you know, complicated, almost like personal financial situation in terms of client who’s self employed, and very successful business makes plenty of money. And he called me he’s like, I just want a solution where I can just buy a house, I don’t an investment property, I don’t want to have to be getting you a million tax return documents going through all my bank statements. What do you have, and LO and behold, we have the perfect solution, which is the investor cash flow loan. So we’re actually, I think, ended this month, we’ll be closing the second one for that particular client. And he would, again, qualify conventional all day long, but he’s just looking for the simplicity of it, right? It’s, it’s a loan loan to value, it’s what your downpayment is, what it’s going to appraise for and what your credit score is. And then a few other factors, obviously, but in terms of getting it through, from a customer perspective, it’s super easy for him right. Now, another great story, you know, you already hit on the 10, finance properties, tab cap. So I still have clients who call me and say, Hey, I’m about to buy my fifth investment property, I need something other than than a Fannie Freddie loan, which I think long before that changed long before I got into business. But there’s still people who come to end up coming to us thinking that their cap that for which, again, kind of back to the we can save the day, even without the investor cash flow, but the once you hit that 1010 cap, we’re doing one right now for a client who’s got 10 investor properties and no end in sight with what she wants to keep purchasing. And the other piece of it, too, is the ability to title the property under an LLC. Right from the get go. So obviously, that’s not available with a with your conventional programs. I know, it’s, it’s available for a couple of our port stuff, which is a great asset, especially for investors. I don’t know how about you all, but seems like every investor wants to title or have their properties in LLCs. Lately, and for good reason, especially with everything going on.

Michael Chabot
Agreed. Yeah, and I think you both hit on this, which is for those of you listening, that maybe haven’t gone through the loan process in a while or haven’t bought an investment property. Especially if you’re self employed on top of it, you own multiple properties, it can be an absolute boatload of documentation that you have to collect and gather and to deliver to us. And so the investor, cash flow really does streamline the process. And it’s more like a commercial loan where it’s based on the property instead of the borrower themselves. Again, for compliance reasons, and I know Chris, you had said it, you know, there are credit score requirements, there are loan devalue requirements. But beyond that, then we really do look at the property itself and how it cash flows. So that is a great, great product. Gentlemen, I don’t want to take up too much of your time. I think really the last question I have for both of you today, and I would love for you both to answer it. Even if you have the same answer, which is if there are consumers and realtors and probably even builders listening to this today, what would you tell them why they should be working with Angel Oak Home Loans and what differentiates us from everybody else?

Chris Philmon
That’s yeah, that’s that’s that’s something that I really pride myself on as being at Angel Oak as long as I have been since day one. I mean, we really do focus on the borrower and the client experience all the way to the very end. We are creative enough to realize who those underserved borrowers are now when we say underserved now that doesn’t mean under qualified I would still say that they’re they’re underserved is a segment of good borrowers great credit money in the bank. There’s just not a product for them it’s not it’s like I said it’s not under qualified but the lead me decided we are referral generally are a referral based business to where we know that that entire experience and getting that person to the closing table, whether it be from a builder, a real estate agents, a current Angel Oak client and their fam family or friends. We are we are we are dedicated to that delivery of a closed loan at the end as smooth as we can. We’re constantly from an executive standpoint or whether it be on the capital market side or just the executive standpoint in our on our home loan side. You know, we are constantly trying to think of ways to to create new product and to and to build a better service to get to have that the best experience for our our people internally. and externally, all the way to the end.

Michael Chabot
Great answer, Tim, how about yourself, sir.

Tim Horst
So I think it really comes down to the product suite and always having options, you know, we, we run into scenarios all the time where another lender couldn’t get it done or something like that. And that’s just, when, when the client comes to us for a solution, that just speaks volumes, and we get it done. First of all, it speaks volumes to the realtor, I’ve or to whoever the referral partner is. And I think that’s one of the biggest things is, I’ve got agents who call me who are looking for a solution to a problem, because we saw the problems before, right. And that just kind of naturally breeds those relationships and makes us there go to go to lenders. And one of the things actually, it’s funny happened yesterday. So I’ve got a couple of contracts out there for investment properties, and the clients, or the listing agent on all of those properties is the same agent. So he actually called me and said, What, What are y’all doing that’s different, that all these investors are choosing to work with you. And just because of that, it just shows and, and leads to those conversations, we’re grabbing lunch next week to talk about our product suite? And how we can do we do things differently and, and more efficiently and try to serve our clients the best we can.

Michael Chabot
Yeah, that’s it’s a great answer. And it really is boils down to, it’s great being a person who can go out and serve the market who has so many options to help first and foremost client, your clients that consumer, get their home, whether it’s their dream home, their second home, their first investment, or their 15th investment, right. Second to help your realtor partners, you know, serve their clients better and, and close more transactions. Builders, the same thing, and I’ll share with you guys real quick, we have a story of somebody who works within our company here at Angel Oak, she approached a builder and said, Hey, give me all of your self employed turndowns that you can’t do. And they looked at her kind of cross eyed and like, You’re crazy. But alright, here’s here’s 10 that we couldn’t do, she was able to come in and save six of those 10 turndowns that they had. And of course, for those of you that work at a builder or who are a builder listening to this, that’s a huge, huge place of serving more people selling more of your homes. So that’s what we can do with these products. And I just want to kind of wrap up with the fact and I’m sure you guys are seeing it too. Post pandemic. There’s more and more people who want to be self employed who want to control their own destiny. Right. And we talked about this word, the gig economy, where people are doing multiple things, whether it’s, you know, YouTube channels, they’re driving for Uber and Lyft, and all these other companies. You know, there’s just a lot of different things out there that, you know, traditionally we haven’t seen before. And I love the fact as as a loan officer here at Angel Oak Home Loans, that we have these tools, that we have these things that we can help more people achieve their dream. Gentlemen, is there anything maybe that you’d like to add before I let you go? And just because I don’t want to break tradition? We’ll go with Chris first.

Chris Philmon
Yeah, well, hey, you, I really appreciate you having us on today. But you just touched on a very important piece. As to Fallout, as we call it in the business, every one of my preferred accounts started as a fallout relationship. I’ve got three, three main big ones. And there was a builder that I had in the past, but they got sold out to another even bigger builder. But that was a relationship that started on Fallout two, what would happen is is the agent I would get an agent would call me because one of their deals would have been falling out could have already been pre approved, the house is now complete. And then they get down to the end and they end up sending it to us we get it closed. Well, those agents are going to start talking to other agents in the office, your name is going to get passed around. And before you know it, you’re getting these leads are you’re getting these referrals that you don’t have any competition with at that point, which is kind of nice. And you can kind of close it on your own terms at that point, which makes it a lot easier.

Michael Chabot
Yeah. How about yourself, Tim?

Tim Horst
Oh, yeah. Well, first of all, thanks for having us, Michael. And, Chris, I think you hit the nail on the head right there. And it’s, it’s the culture that the comp our company has, and it’s to be continually continually innovative in order to serve the changing marketplace. And because we’re able to do that we’re able to provide the best resources, the best products for our clients and for all of our agents referral partners out there to be their go to, you know, either to save the deal or for for those You know, running the mill, general mortgages. So it’s the culture that has been, you know, top down, all through Angel Oak and through the Salesforce here to be able to provide the best products and service in the industry.

Michael Chabot
Yeah, I think that’s a great answer. And before I wrap up, I’ll just say, gentlemen, thank you for being guests. Thank you for sharing I know. As loan officers in busy marketplaces, time is is something that is your we’re all short of these days. So I thank you for generously sharing it. And then I would just add a couple things. So for those of you listening, if you want to kind of hear on how this company got started in the philosophy and how they took a risk, and went in and helped people at the beginning, our very first episode with Steven Schwalb, he talks about that too great episode. So go listen to it. And look, we do all things great. Here. We do conventional, Fannie, Freddie, we do you know, traditional jumbo, we do VA, FHA, all those things, with a very high level of excellence. I just love the fact I don’t know about you guys, but I feel like you know, I come to work every day with that SMHS because I feel like I know what the products we have. And you guys touched on it, the culture of the company, the leadership we have, that we can really truly help a lot more people. And we truly are unique in this marketplace. Absolutely. That’s right. So gentlemen, continued success in your marketplaces, continue to go out there and help more people. And I thank you. And for those of you listening, if you like this, please, you know, give us a like, subscribe, share it with your friends on social media. And again, I’m your host Michael Chabot, this has been Your Mortgage Matters brought to you by Angel Oak Home Loans.

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