Citadel Servicing’s new Alt-A program dramatically cuts documentation

by Ryan Smith09 Mar 2017
Self-employed people often face challenges when shopping for a mortgage. However successful their business may be, they often have difficulty satisfying the proof-of-income requirements for a traditional QM loan. That’s where the non-prime space can help.

Many non-prime programs allow borrowers to prove income through bank statements. And non-agency lender Citadel Servicing Corp. (CSC) recently launched a program that makes that process even more streamlined. 

CSC’s normal Alt-A Maggi Plus program will allow qualified borrowers to prove their income through 24 months of bank statements. 

“Our bank statement program has been successful,” said Will Fisher, senior vice president and national sales and marketing director for CSC. “And what’s nice is that since we service about 99% of the loans that we’ve funded, we’ve been able to track their performance. We can track why a borrower goes off the rails or why they don’t.”

One thing CSC found through that tracking, Fisher said, was that its 24-month program was, in some cases, too conservative. So the company recently introduced a variation that requires only 12 months’ worth of statements.

“This is a Maggi product, which means it has a 650 minimum FICO,” Fisher said. “Depending on the credit score, we’ll go up to 80% loan-to-value, but this one only goes up to 12 months instead of 24 months. It really cuts down on the documentation.”

The program offers loan amounts up to $3 million. With at least a 650 FICO score, borrowers can get up to 75% LTV, Fisher said. With a FICO of 700 or greater, borrowers can receive up to 80% LTV. 

The program is a solid bet for CSC because the company offers it only to well-qualified borrowers. Prospective borrowers must have been self-employed for at least two years, and can’t be first-time homebuyers. Borrowers qualifying for the program are “seasoned mortgage-payers,” Fisher said.

“We’re only extending this product to folks who have demonstrated a competency for paying their bills,” Fisher said. “They can’t have had any major life events in the last two years, and they’d also need reserves of six to 12 months. We’ve had really good performance from borrowers on this product, so we’re confident in their ability to repay. Plus the debt-to-income ratio on this is limited to 43%.”

And the program gives options to borrowers who might have difficulty qualifying for traditional mortgages.

“The self-employed borrower who may not be able to provide traditional tax returns, or they capitalize on the tools afforded to them to reduce their taxable income – that reduces their ability to qualify under traditional rules,” Fisher said. “Self-employed people are ideal candidates for this loan – especially if they have a good credit history. By utilizing the personal bank statements of these self-employed borrowers, we get a more realistic picture of their everyday financial situation. So, in many respects, we can make a much more informed judgment on a borrower’s ability to repay.”


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