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Need a Low Doc Loan for Business Purposes (CA, OR & WA)?

May 10, 2017

Normally a consumer credit transaction will be subject to the provisions of the Federal Truth in Lending Act (“TILA”), Regulation “Z”, the Real Estate Settlement Procedures Act (“RESPA”), and Regulation “X”. However, TILA and Reg “Z” provided a number of exemptions for:

•Business Purpose Exemption;
•Credit Extension to Acquire, Improve, or Maintain Single Family Rental Property;
•Credit Extension to Acquire, Improve, or Maintain Owner Occupied Rental Properties of Two (2) or More Units;
•Credit Extension to Foreign National Borrowers;
•Loans on Properties of Twenty-Five (25) Acres or More; and / or
•Cross-Collateralized Properties With One Being Owner Occupied.

The mission of the Outside Dodd Frank Loan Program is to provide financing to loan requests on a stated income with verified assets loan request under specific terms and conditions.

Outside Dodd Frank Loan Program

Lending Program on case-by-case basis is designed to address any lending opportunities that do not conform to Non-Prime Guidelines (NPG). Among those opportunities will be loan requests for Ability-to-Repay (ATR) complaint loans such as:

•Property listed for sale currently or in the very recent past;
•Borrower’s with insufficient credit depth;
•Properties that are in need of repairs but are not subject to withhold of funds to make such improvements; or
•Any other request of a nature that does not conform to NPG but has merit with Senior Management approval.

Normally a consumer credit transaction will be subject to the provisions of the
Federal Truth in Lending Act (“TILA”), Regulation “Z”, the Real Estate Settlement Procedures Act (“RESPA”), and Regulation “X”. TILA and Reg “Z” provided a number of exemptions; one of which is the business purpose exemption. To wit:
Credit transactions involving extensions of credit primarily for business, commercial, or agricultural purposes.

A seasoned real estate investor with 2+ rental properties (or if purchasing a 2nd rental property) will be held as an exemption to these rules in that their business is the ownership of real estate in their personal name. For qualification purposes, they will need to provide the same documentation as a standard Non Owner Occupied product.

The investor/lender will consider mortgage loans secured by a Borrower’s Personal Residence analyzing the proposed loan transaction as a whole for classification for a Business Purpose Loan provided that:

1.The Borrower is currently self-employed or will be purchasing a business or franchise;
2.The primary purpose of the loan is more than one-half (50%) proceeds are employed for the stated business purpose;
3.The Borrower’s primary occupation is or will be related to the current business or any acquisition for entry into or expansion of a business;
4.Documentation is presented in the form of contracts or offers to purchase that provide the reason for the loan and how loan funds or a portion thereof will be deployed;
5.The Borrower’s statement of purpose for the loan; and
6.Loan funds are credited to borrowers business directly through the HUD-1at closing.

Specific examples of acceptable needs that may be fulfilled by a Business Purpose Loan:

1.A loan to expand a business.
2.A loan to improve a principal residence by building out a business office.
3.A loan to buy equipment specific to a business.
4.Loans on Property of twenty five (25) acres or more.
5.Investment in a Corporation, LLC, or other type of entity from which the Borrower intended to personally benefit.
6.A borrower with 2+ rental properties (or if purchasing a 2nd rental property) may use either the Debt-Service Coverage Ratio method for the subject property on its own or an aggregate of net rental income for all rental properties to qualify.

Borrowers eligible under the Foreign National Program are:

•Non-Resident Alien is a Foreign National who is not authorized to live or work in the U.S. A true Foreign National may periodically visit the U.S. for various reasons including vacation and / or business. They may purchase property for either personal use or investment.
•Borrowers who are holders of Individual Tax Identification Numbers may be considered on a case-by-case basis for this program.

Rehab:

Investor/lender will consider for funding loans on properties that require rehabilitation and or improvements. Such loans are not to be considered construction loans but simply “home improvement” to improve or make a property habitable.

Listed for Sale:

Investor/lender will consider for funding any property(s) listed for sale currently or in the recent past. While atypical, each such request will be considered on its own merit to a maximum Loan-to-Value of 65% based on a current appraisal and Broker Price Opinion.

Cross Collateral:

Investor/lender will consider more than one property as collateral for a loan request in the instance where there is insufficient equity to provide a reasonable Loan-to-Value. While it is preferable to have a first lien on any and all property offered as collateral for a loan, CSC will consider a second or junior lien position on one property from time to time.

Matrix:

  • Property Types – SFR / Low and High Rise Condos / Townhouse / 2-4 Units
  • Occupancy – Owner – User / Second Home / Non Owner
  • Credit Scores – 500+
  • Documented ATR may be applicable under certain scenarios
  • Loan Terms – 30 Year Amortization & Term – 7/1 Hybrid ARM
  • Index & Adjustment Caps – Floored at Start Rate / 1-Year CMT / 6.950% Margin – 2.0%
  • Initial Change Cap / 2.0% Annual Cap / 6.0% Life Cap
  • Refinance of Property Listed for Sale within last
  • Loan Amounts – $100,000 – $2M (Round Down Loan Amount to $50 increments)
  • Loan Amounts >$1,000,000 require Senior Management Approval
  • Loan Amounts >$1,000,000 require 600 Minimum FICO
  • Loan Amounts >$1,000,000 require an Appraisal & BPO
  • Loan Amounts >$1,500,000 require two Appraisals
  • Foreign National Loan Amt. >$1,000,000 considered for NOO only
  • Foreign National – Funds to Close Must Be Verified in U.S. Dollars with Valid Banking Relationship in Country of Origin
  • Foreign National cash out ≥ 65% Case-by-Case basis
  • Stated Income / Verified Assets (If Applicable)**

PMC offers other low docs loans or bank statement loans, which require CPA/P&L/Balance Sheet and 12-24 Personal/Business Bank Statement Loans (single account – using average monthly deposit averages-100% from personal and 50% from business) and also has other low doc home loans for 500+ FICO borrowers.

Our goal is to find you the best financing available to save  you the most money.  Ask the experts.  Email your scenario to info@pmccanhelp.com.

Make sure to visit our website:   www.pmccanhelp.com

FOR A FAST PRE-APPROVAL: Complete a loan application on our website APPLY ONLINE

Job Opportunities? PMC has been a premier CA, OR & WA brokerage since 1989.  Visit our Careers website and apply online today! www.pmccareers.com

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