Arc Home Loans gets a facelift with a new non-QM product

by Kimberly Greene03 Oct 2019

Arc Home, LLC has launched its new website, reflecting the fresh outlook of the company and the excitement about what they’re bringing to the market, including a new proprietary non-QM product.

Will Fisher, divisional vice president for Arc, says that their guidelines are completely unique to the company and visitors to the new site will discover that very quickly.

“We went from being kind of an outlier a few months ago . . . to now having solid guidelines, a proprietary product set, and market-leading rates. Now's the time to show the world what we've been doing here for the last 45-50 days.”

The new site is information heavy in all the right spots, and brokers will also notice that they’re very heavy on technology. Arc is completely automated, so once a loan is uploaded, brokers can communicate through the portal, upload more documentation, see what they’ve uploaded, what works and what doesn’t work. Brokers are now also able to price light detail or heavy detail, use their credit report, then send disclosures at the click of a button, quickening the entire process—which is particularly useful since they can set their own closing dates in many situations.

“It's a different mindset. It's a better thought process. It makes the experience so much more streamlined and efficient, not just for the broker, but for the borrower,” Fisher said. “A lot of that old school thinking from subprime era that still exists with a lot of lenders when it comes to manual process, we've now brought that up to 2019 standards and added levels of security, efficiency and compliance that you just can't achieve when operating in the old school way.”

Because Arc is no longer operating in the “old-school way”, they’re hoping to reach what Fisher calls “technology-forward” brokers, a new breed of originators who understand not only how technology works, but really want and expect to operate in that kind of environment from a speed and efficiency perspective.

Arc’s new product suite incudes: an Alternative Income Bank Statement product with one of the lowest fixed expense factors in the space, where the borrower does not need a P&L and can take advantage of their “innovative” Asset UItilization program; an Agency Plus product, where a borrower can get up to 95% LTV with no MI; a Clean Slate product for borrowers who have had a rough credit history, with LTVs to 80% and DTI up to 55% for certain LTVs; and a DSCR product that goes up to 80% LTV as well.

The goal is to expand on the years of experience that Arc has under its belt in the prime space, Fisher said, and bring it in line with the needs that currently exist for non-QM qualifying borrowers and brokers that serve them.

“We're not trying to reinvent the wheel. We're identifying real opportunity, and gear our offering to evolve at specific risk levels that have a track record of performance.  When you couple that with superior tech, that’s the secret sauce,” Fisher said.

Arc’s previous iteration of their non-QM product wasn’t exactly competitive. The guidelines were very conservative and limited, and weren’t in line with other non-QM products on the market. After a complete reassessment, Arc started making changes and completely revamped the guidelines, highlighting the advantages and differentiators that they do have.

Even though Arc has been a bit late to the game, all signs point to continued growth. Self-employed borrowers are beginning to realize that they have more purchasing power than they expected, and regardless of what happens with outside factors such as the GSE and QM patches, there are still borrowers with tarnished credit or who need loan amounts that traditional lenders aren’t willing to provide. Fisher likens the current environment to the Web 2.0, when it really started to change beyond its initial iteration. Today’s non-QM is really subprime 2.0 with many more regulations and safeguards, Fisher said, and that’s a good thing.

“I think this time we've got it right. Only time will tell.”