The non-QM space isn’t just for self-employed residential borrowers. There’s also a huge market in non-QM for business-purpose loans – a market being tapped by theLender’s successful NONI program.
The NONI (non-owner, no income) program is designed for business-purpose one- to four-unit commercial loans. Since theLender rolled the NONI out about three months ago, it has submitted more than $150 million in NONI loans. The success of the program has pushed theLender to become the fastest-growing non-QM wholesale lender in the country, according to Cory Tona, executive vice president of theLender.
Bryan Filkey, senior managing director at theLender and creator of the NONI product, said that the program taps a huge potential non-QM market.
“There are approximately 16 million self-employed borrowers in the US right now,” Filkey said. “When you look at non-owner – and specifically one- to four-unit properties – there are 24 million of those out there. So we’re not out there tring to fight over 16 million bank-statement properties that take 60 days to close.”
In fact, with no TRID timeline restraints, NONI loans typically close in five days or less. They’re also a much better deal for the borrower than many other funding options, Filkey said.
“The value opportunity for us is, you’re going to get a 9% interest rate, three-year hard money loan – or you can come to us and get a rate in the 5% range with a 30-year maturity,” he said. “We actually qualify (NONI loans) off the cash flow of the property, similar to a large-scale business loan. As long as the rents are the same or higher than the mortgage payments, that loan is approved.”
Borrowers can even use revenue from short-term rentals to qualify, Filkey said.
“In every quarter, Airbnb and VRBO are eating into 2% of the revenue of the hotel industry,” he said. “We allow you to use the short-term rents that you receive from Airbnb or VRBO. Many of our competitors will require you to have a long-term rental. We allow people who have been successful, with a 12-month track record of rentals through Airbnb or VRBO, to utilize the higher rents they’ve received.”
The NONI has a maximum LTV of 80% and is good for loan amounts up to $3.5 million. Eligible borrowers will have a credit score of at least 620.