“There is a lot of money on Wall Street that is sitting on the sidelines. They were taking a ‘wait and see’ approach to see how [non-prime] underwriting performs and how the loans perform,” said Fisher. “They are looking at different performance areas such as how long do these loans take to pay off, do they pay off quickly, etc. Investors don’t want a loan that pays off too quickly, they want it to perform and they want a great ROI. That is what they are looking for and that is what we are delivering at the end of the day. Every day we’re seeing more investors looking to come into this space.”
After the financial crisis, subprime loans earned a bad reputation that has been difficult to shake off. But now, borrowers who have been stuck with little options in a “Fannie Mae and Freddie Mac-world” now have reliable and quality options when looking to purchase a home. Fisher pointed out that all types of borrowers now have options under non-prime. For example, Citadel recently launched a new loan program, Maggi Plus, which offers $3 million loan amounts just 24-months following a short sale
, foreclosure or bankruptcy – furthering the company’s commitment to providing options for all types of borrowers. “We’ve built a product that is fantastic and there is a lot of room in this space to grow. There are not many of us in this space and there are a lot of compliance hurdles to get through as a lender. But if you can navigate those hurdles, especially ATR and TRID, correctly, then you could do really well in this market,” he said.
With non-prime loans gradually making their comeback onto the mortgage stage, Citadel is taking proper steps to ensure that loans underwritten today do not fall into the same trap loans did years ago leading up to the crisis. By adhering to their ability-to-repay notion in each loan they originate, purchase and service, Citadel is able to ensure that a high percentage of loans will pay over time and also evaluate the loans that don’t to find ways to restructure the product for success.
As Citadel prepares to increase their wholesale operation, recently adding Nevada and Vermont to their roster, the company is aiming at reaching $100 million in funding monthly by early next year while building a retail arm. “Our next big initiative is our retail operation,” said Fisher. “We are buying leads and experimenting with different sources and putting the products right out there direct to the public. So you will see Citadel make a real push into retail within the next few months.” That push deeper into the market is a testament to the opportunities open in non-prime. “Take a deep look at non-prime. If you want an edge on your competition, you want to be in a space where no one really is yet. No one is taking care of these borrowers – non-prime and non-QM
is where to be.”
For the mortgage companies looking to grow your business, non-prime may just be the answer said Will Fisher, senior vice president of loan production with Citadel Servicing, a non-prime