Acra Lending (‘Acra’), recently rebranded from Citadel Servicing Corporation, has announced the launch of a new jumbo prime program. This loan program represents a historic departure from the company’s traditional offerings in the non-QM space, one that it expects will allow it to expand its suite of product offerings and capture a segment of the market currently dominated by very large players.
Acra executive chairman and president Keith Lind (pictured) spoke with MPA about what this program will entail. He detailed how, and why mortgage professionals should consider using it in their practices, as well as why Acra is making this shift and launching a product outside its traditional wheelhouse. He put the product launch in the wider context of Acra’s acquisition nearly one year ago and a renewed purpose as it strives to innovate in the market.
“If you look historically at true jumbo prime, it usually ends up on banks’ balance sheets,” Lind said. “It’s places like Chase and Wells that originate these loans. If we look at the size of this market - it’s around $500 billion, much larger than the non-QM market. It’s a place where we think we can be competitive.”
Lind said the Acra program is informed by what Chase, Wells, and other leaders were doing in this space. He noted that the jumbo prime category is much closer to a qualified mortgage than Acra’s traditional non-QM wheelhouse, with only a loan balance exception keeping them outside the QM bucket.
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This program likely would not have been launched under Acra’s previous ownership. Lind said the capacity to launch this product has been buoyed by new partnerships with the likes of Morgan Stanley, Credit Suisse, Goldman Sachs and Barclays. Partnering with these large “money center” institutions allows Acra to finance and potentially be an outlet through their jumbo conduits.
The program, Lind explained, will serve larger loan balances. He is projecting their average loan balance over $1 million and, with a prime rate, he expects these borrowers to have a higher credit than the average non-QM Acra borrower. It’s a product suite that he believes can be very helpful for mortgage originators as the market shifts to a purchase focus in 2021 and record home price appreciation demands larger and larger loans for buyers to stay competitive.
A jumbo loan like this, Lind said, is a necessary tool in a world where home prices keep increasing and GSEs are raising their loan balance limits on an annual basis. The 50 most popular metro areas in the USA are getting incredibly competitive as more homebuyers look to capitalize on historically low rates. For an originator to stay competitive in these markets, Lind said, they will need to use a program like this.
“Originators should be excited about this,” Lind said. “This is a $500 billion market that we’re including among all the great non-QM products we offer. Originators can come to Acra and have all these products available at their fingertips without having to compare rate sheets between competitors. Anything that’s not GSE, that’s not Fannie or Freddie, we want to be originating. It comes down to being a one stop shop for all our brokers where they can come here and know they’re getting the best price on all the products offered to make their lives easier.”