Laura Brandao, chief operating officer at American Financial Resources (AFR), acknowledges that many real estate agents and lenders think renovation loans take forever to close and bring headaches that can extend far beyond closing.
“The biggest thing is changing the perception. Years ago nobody wanted to touch renovation loans. They all said it is too complicated, it takes too long, and there are too many people involved,” said Brandao, adding that none of those things are true anymore, at least not for lenders working through AFR.
She said she hears from clients all the time that “doing a renovation loan with us is just like doing any other loan. Doing a renovation loan today is nothing special. It’s not grueling or something people need to be afraid of.” She said the average time from approval to clear to close is 30 days. “There is no reason for people to think they will be in this process for 90 or 120 days. That is just not the situation anymore.”
Brandao said the key to success for originators wanting to do more renovation loans is being able to handle the backend of the deal easily. For those agents who don’t want to deal with contractors and the borrowers who need to get checks issued to those contractors, AFR will handle loan processing for no extra charge. “We offer something we call On Demand Processing. They can decide to have us process the loan in our wholesale channel. One reason originators shy from these loans is that not only are they not familiar with these loans but neither are their processors. We will do it, no charge. We will deal directly with the contractor and the borrower. The originator doesn’t have to be involved in the back end at all,” she said.
The difference between an originator who writes renovation loans and one who doesn’t is that one thinks such loans are more trouble than they are worth and the other knows better.