203(k) renovation loan had many clients wary of just what they were getting into – but those lenders who bought into the program from the start are today singing its praises.
Since the inception of AFR’s renovation department and their role in working with clients, specifically on FHA 203(k) renovation loans, Andrew Allen, the manager of the renovation department and product specialist at AFR, has seen it take off.
“The reaction from brokers has been overwhelming,” says Allen. “Several years ago when management asked me to head-up the rollout of the 203(k) program, 203(k) loans were an obscure product, but people heard they were difficult. Due to a lack of understanding and resources, they were simply avoided. We now have an entire renovation department dedicated to answering questions and guiding our lending partners along the way.”
Using this as a base, AFR has seen growth of its Wholesale Direct (WD) lending channel.
“For the broker market, our WD lending channel offers free and effortless processing,” says Allen, with the broker being responsible for taking the application, disclosing the loan and then sending that package over to AFR.
“We handle it from there, speaking to the borrower, Realtor, Title Company, etc., to get the transaction wrapped up as quickly as possible,” says Allen. “We will underwrite, process, and close the loan for them, without any fees. Our motto for the WD lending channel is, ‘You originate; we close. It’s that simple.’”
Even when a client submits through the Wholesale Direct channel, they can still choose which loans they would like AFR to process and which ones they prefer to process themselves.
“Our goal is to give brokers the freedom to originate and process at their discretion,” says Allen, “giving them confidence in knowing that they can originate more difficult loans, such as FHA’s 203(k) or One-Time Close Construction loans, without clogging up the processors’ pipeline.”
The success AFR has had utilizing the FHA 203(k) loan has been satisfying for the company, says David Margulies, AFR’s EVP of sales.
“This has been a trying time for a lot of folks, and unfortunately in the positions that they have been in, this has been a way for them to actually grow,” says Margulies. “If you think about it, when somebody goes in to buy a house today, which is truly a feat unto itself, there is actually a product [203(k)] that will allow somebody to buy a home that needs repair – and the lender is providing the money at only 3.5% down. You may not have a lot of capital to your name, but you have a solid job and you can buy a home that’s tired – and you have a lot of homes like that in small towns.”
The introduction of the