It’s now the unspoken rule of A lenders, including monolines, charge brokers: BFS clients declaring income north of $100K are quite simply persona non-grata.
“I think it started to change about a year ago and now I venture to say that 90 per cent of brokers understand that regardless of what lenders say on paper, once the client breaks the $100,000 mark, they will be turned down for Triple-A rates ,” says Darin Bauer, an agent with Mortgage Intelligence. “That’s regardless of their down payment and credit history and whether their business is incorporated and the income makes sense.
“I wish the lenders would just come clean and put that in their guidelines rather than have us waste time.”
The palpable frustration is more and more common among brokers specializing in Alt-A deals but also the increasing number now turning to the alternative space as the stream of A deals slows.
They point to a growing gap between the declared underwriting guidelines for BFS deals and those actually in use by various lenders. The discrepancy comes at the cost of broker efficiencies but also the time loss for clients and mortgage professionals.
Bauer points to a recent example where a client with a down payment of 50 per cent and stellar credit was turned down more than once by lenders with established and much-touted BFS programs.
The scenario is more commonplace given the tighter underwriting guidelines banks are now operating under, still brokers remain concerned that their advertising is out of step with their practices.
That isn’t likely to change anytime soon, says one industry veteran suggesting alternative lenders will ultimately benefit for the stricter unwritten policies of A players.