“We just closed a deal with two doctors. They had some medical issues, they had a tax lien, they’d had a failed business, and they had a 15 year loan. We moved them into a 30 year, paid off their other debts and they are still 50% LTV. They make plenty of money, just a great customer, but no bank would touch them. They had had a loan modification that didn’t work out. We could look beyond all that to get them a good loan. So now they have a year or two to clean things up and probably get into a traditional loan.”
And that, he said, is how it goes.
“People do use them as bridge loans. We aren’t--and should not be- anyone’s long term solution. We give people the ability to improve their situation, improve their properties and refinance and position themselves for future success. People who come to us are rewarded for their hard work. It makes me happy when we get a payoff request.”
If you sense that he likes telling client success stories, you are right and he uses such stories to drive web traffic and make the phone ring. The ACC website has a column called “Recently closed loans” where they describe the client, the client’s need, and the solution. Many of the stories involve renovations of once troubled properties.
He said consumers benefit from subprime lending and added that he is especially proud that ACC has been CDFI (Community Development Financial Institution) certified for something like 20 years.
Senko said he thinks the market is strong, adding that he does not see any signs of a bubble.
“Any talk of a bubble is crazy, it is patently false. What created the bubble was people being over leveraged. All of our clients have at least 20% down. We’re a portfolio lender. People have to qualify. We always ask what is our risk tolerance? Can we work with a self-employed person, can we make that leap of faith? That is where judgement comes in.
“People can’t expect property values to go up 10% a year indefinitely. If you believe it will, you can get hurt. We will have slow growth and that is a good thing; that is how it should be. I think the market is good and is slowly improving. The economy and jobs are stable,” he said.
Robert Senko, Co-founder and co-CEO of subprime lender ACC Mortgage, said they lend to people who probably couldn’t get loans from a traditional lender but that many of their clients could get “A” loans but choose not to for one reason or another. When the company closes an interesting loan, or a loan to an interesting client, or a loan that others might have passed on, they post the details on the company website, and potential clients respond.