Everything You Need To Know About Bank Statement Loans

– Hi there, my name is Teresa Tims president of TDR Mortgage
and Real Estate Group serving the entire California market. I’m here with Miss Heather Fox, a wholesale representative with one of the wholesale lenders that we send our none QM loans to. Heather please explain to the audience what it is that you do and why are bank statement home loans
important in today’s market. – So I am account executive, I work for a wholesale lender, I deal with brokers and we provide many different
alternative programs for home loans and borrowers
that have credit events – Credit events, oh my what’s
that, what do you mean? – Credit event meaning like, bankruptcies, foreclosures, deed and lieus – Got it, okay – Short sales, anything like that – Okay – Where they just can’t
go through the traditional you know, QM route we do
alternative loans for them. – So, you’re one of
those subprime lenders? – No – Definitely not a subprime lender. – So that’s not a thing
anymore, subprime lending? – Subprime lending is not a thing anymore that is a thing of the past, we are a none QM lender. – And QM means qualified mortgage? – Absolutely. – So today were going to debunk and hopefully shed some light on the mysterious bank statement loan. There are many facets
to a bank statement loan there are ways to go around
the standard criteria that one would put in front of you or say that you have to adhere to. So bank statement home
loans, they are the same everywhere there are slight variances and some people do them
better than others. People that have done
them have better success and guiding someone to achieve success on a bank statement home loan
’cause they are not easy it’s not like oh bank statements you don’t have to show income we don’t have to show your taxes but you’re gonna lay it
out there in the form of showing bank statements to the lender. And as a loan broker, when someone says, “Hey I wanna qualify on a
bank statement program.” My first thing is, let’s
see the bank statements you know, send me 18,
2018 send me all of 19. Honestly, I prefer to just do one year. I find that the more you expose yourself the more questions are
and the harder things are. But Heather tell me, you
guys have a three month, you have, do you have a six month? – We don’t have a six month.
– So three month – A 12 month and a 24 month bank statement program. – So in general, when We’re looking at bank statements to qualify someone if you’re looking at personal returns and I’m looking at 12
months and this person routinely deposits $10, eight thousand dollars,
seven thousand, five thousand and then in another month
they deposit 50 thousand and then all the other months are normal what happens when you
have that large deposit? – We will give them credit for it but we need to source it
because obviously it’s not part of the trend of what
they are normally depositing. So yeah I mean if they can source it and we can see it’s business income – Business related – Yeah business income – Otherwise you’re gonna back it out. – we’re gonna back it out, yeah. – So, now that would be the same with so you can qualify with
personal bank statements? – We can – Would I give that person the 100% of the deposits as long
as they’re verifiable? – Absolutely, you got it, you know this. – Okay so what about, what
about business returns? Now business returns can be really tricky I know my business returns,
’cause I’m super successful. My business returns are like 50 pages of bank statements because
I have so much money going in there, I’m just kidding, (laughing) My bank
statements no they’re like you know 15, 20 pages
I think that’s average for most entrepreneurs,
most business people have you know 15, 20 page bank statements so if I asked for 12 months that a lot of stuff to be pouring over. So we look through those bank statements and I guess I look for consistency. I’m looking to see okay yeah they deposit 50 thousand, 20 thousand, 20 thousand five thousand, five thousand and then If I see like a 200
thousand dollar deposit I’m like, oh this is kind of out, yeah this is kind of out of the norm so how do you guys view that? How would you handle that? – I mean we would do the same thing, We’re gonna to back it out. If its out of the norm,
again if we source it we would know that it’s business related that we’re gonna give them credit for it but if it’s out of the norm,
you know, we’re not gonna give them credit for it
unless they can prove that its, business. – So with personal returns you’re going to give them 100% the deposit? – Correct – And with business returns
you do not give 100% of the deposits, why is that? – So I mean we give
them 50 percent because we assume every business has
some sort of expense factor there is, you know an
expense in running a business so our standard and industry
standard across the board is about 50% of the bank statement. – Okay – Unless they are a
consultant and maybe they work from home or somewhere
where we can really see that, that it’s just not
necessary to give them 50% or take only 50% of their bank statements. We’ll ask for a CPA letter
or an expense letter from a certified public
accountant or enrolled agent stating that their
expense factor is lower. – So I heard that recently come up where I just took in half
of the business returns and he didn’t qualify
and he was a consultant and so we just got a CPA letter that said, this is to verify or
validate that the expenses are at like an 89% factor thus I was able to get
this gentleman to qualify for a home loan and so it worked out nice but it has to make sense. Like I feel like everything
in bank statements it has to make sense. Okay so lets say I do a
three month program, Heather. – Okay – And, three months of bank statements I’m not to qualified, I have, I’m new, I just started my business
and I wasn’t really making that much money but now
I wanna buy a $1000000 house ’cause I’ve been
depositing 50 thousand in my bank statement,
so let me buy a house. – Okay so are you saying that
you’re new to your business? – Yeah I just started
but I’ve got three months of bank statements here,
I want to buy a house. – Okay so that’s not
gonna be a loan for us. We need to have at least
two years self-employment either documented by a
CPA or a business license. And if you’re giving me
three months bank statements we’re gonna ask for 24 month P&L and it needs to be signed
by a CPA or enrolled agent. – So that’s where I was getting at, that even though you may see
these, you know three month, six month, 12 month programs, you still have to have been in business and you have to validate
that through some kind of a business license, a business listing, a CPA letter, right? I mean you can buy a house
with this substantiated three month bank statements but you have to have been in business for two years. – Absolutely. – What is the least amount,
okay so this is 2020 in the past bank statements
you needed to have I would say you need
to have like a 700 FICO and you needed to at least put 20% down. But somethings have changed
and you guys had some new, more aggressive products roll
out and I’m super grateful because I feel like 10% is reasonable like when you guys used
to make us, our borrowers come up with 20 or 25
that’s a lot of money. So tell me about the new trends in bank statement loans and
what’s going on out there? – Yeah, absolutely, so
with us we will allow you guys to do 90% so actually put 10% down on a home. But you do have to have a 680 credit score middle credit score, – That’s reasonable, I like it. – We will do 12 month bank statements and 24 month bank
statements on that program. – For the 10% down? – Yes and then the
borrowers gonna need to have six months to reserve, post closing. – Okay got it, so you
don’t want them going in spending all of their money and just not having anything to back up in case of a down turn
of business or whatever. – Absolutely, and the cool thing is that we will allow
borrowers who have a business if they have reserves in
their business account we will allow for them
to use business reserves as our reserve requirement. – Oh wow, that’s cool. And if you’re running a business usually you’ve got money in your business. You don’t usually keep
it in your personal, that’s the trend that I’ve seen. Even if you’re using
personal bank statements you will allow the business
bank statements for reserve. – Absolutely, yes, – Oh that’s very responsible, okay. So when we’re talking about qualifying for a bank statement program my biggest thing to my clients is that FICO, FICO, FICO. I see a big drop off in pricing when they’re below 700. So 700 and above is my
target for my borrowers. – Okay – I like the 12 month versus the 24 month. There are a lot of pricing
differences though. So I want to just kind of run, do some run throughs with Heather. – Sure. – So let’s say a 700 FICO, we got that, 700 FICO, 20% down, like regular conforming
loan limit lets say in Rancho Cucamonga
its like 500000 so like if I was doing a regular
Fannie Freddie loan we would be in a threes
with no points on that loan so what kind of rate would
that borrower typically see in a 20% bank statement
program like a range. – They typically be in about five and an eighth to five and a quarter range. – Oh that’s not bad at all. I was doing FHA loans a year ago at that. Really?
– Yeah yeah no joke. – Oh that’s a great, that’s, okay. Now what if a borrower
were in the 660 FICO? You could still do it
but then would the rate be like in the mid sixes or something? – They would be like,
yeah I would say towards, I would say higher fives to lower sixes now again we have several
different programs we have PrimeX, which
to be honest with you our PrimeX program starts at 3.99. You can do a bank statement
loan, for four and an eighth. – Yeah okay but like. – But the LTV is going to be at 60%. – Okay so they’re gonna have 40% equity, they’re gonna have 780 credit score. – Yes
– 3.99? – Yes absolutely. – Sign me up, who wants that loan? Wow and that would be
with, now would that, okay so now there are
other addons and other variances where is it a
12 month or a 24 month? 24 months you do get
better pricing, slightly. Usually like, how much Heather? – An eighth. – So the difference between five percent to five and a quarter? – Yes – But you’re also giving more documents. More documents, more
explaining more documenting. But if your income is super vanilla like you’re one of those
consistent depositors then yeah lets do the 24
month wouldn’t you say? – Absolutely – But usually my people are
not consistent depositors they like have stuff all over. So usually just for a quarter of a percent we’re usually taking advantage of the 12 month bank statement program. Okay, so it’s a little
bit higher for a lower FICO a little bit lower for a higher FICO. What about like bankruptcies
and foreclosures? Does that kind of like, is that a big deal when it comes to the pricing hits? – It is, I mean it’s
based off of the seasoning of the of the bankruptcy
so we will, on a bankruptcy 13 we’re gonna see it from the filing date and for seven we’re gonna season it from the discharge date and that varies. – Okay. – All across the board. – So now we’re not gonna
go into this too much but I heard that somebody
can do a bank statement loan when their in an active 13. Can you kinda give me a
little of insight into that? – Yeah absolutely, yes we definitely can, you have to have at least a 600 FICO score no, actually in fact we
just updated our program so you can go all the way down to 500k, but you have to have a zero times thirty. – Oh, sorry. – No you have to have a zero
times thirty on your mortgage. – Okay so and usually if someone has a 500 score I mean that’s. – And you have to have
some equity in your house. – Yeah that’s a pretty
low score, so you’ve got major stuff happening. Okay well that’s interesting though for me anytime I’ve ever done
anybody in a chapter 13 we had to get permission from the court and that was usually,
that was usually an issue. In the future is somebody
wants to find out about the bank statement
loans what do they do? – They need to pick up
the phone and call you – And then you can call me. – That’s right that’s right so, for information and
strategies and tactics on how to get access
to the best home loans in California, I want
you to give me a call. My name is Teresa Tims and you can find me on the web at TheSoCalLoanPro.com and I can’t wait to hear from you. And thanks Heather. – Thanks for having me. – For dropping all this
knowledge on my audience today. – Thank you guys. (upbeat music)

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