There’s a lot of buzz recently around the non-QM market, and Embrace Home Loans has found a way to capitalize on that with the launch of beyond, a program that expands home financing options to more borrowers.
The product isn’t really unique, says Parkes Dibble, the director of mortgage product innovation at Embrace Home Loans. The thing is, there aren’t a lot of people offering something similar.
“beyond is a bunch of little niches to serve underserved borrowers to the extent that we’re working with borrowers who are either credit challenged for bankruptcy or housing or credit score challenged. We’re creating an opportunity for them to rehabilitate their credit score and qualify for either a conforming or a government loan sooner rather than later,” he said.
Dibble, who describes himself as “the person behind the curtain” on the beyond product, said that there are other pieces and products that are underway, but the team realized that quickly figuring out a way to offer a broader array of products to attract more borrowers and create more home ownership was good for the right borrowers, Embrace as a company, and the U.S. economy as a whole. These borrowers – whether they be first-time borrowers or those who have been burned by a foreclosure that took years to settle – should be in the market, Dibble said.
“Just because you’re a victim of a downturn economy and/or you bought at the wrong time in a super-inflated housing market doesn’t mean that you shouldn’t be a borrower who deserves a chance to have a mortgage again.”
Some of the loans will be non-prime, but many of the loans originated through beyond will still meet the QM criteria; the goal isn’t to get “bad” borrowers, but to serve borrowers who are currently underserved right now in the market. This includes those with scores as low as 580 to those with debt ratios up to 50%. Dibble says that there are people who can responsibly borrow that type of a debt ratio, and doing so will increase their personal stability, as well as creating another sell for Embrace somewhere down the line.
The originators are responsible for applying a more comprehensive analysis of a borrower's ability to pay than conventional loans, and their use of a “pretty highly automated and prescriptive” system means that they can close loans in an average of 21 days, much shorter than the industry average. Dibble said that they’re not doing any stated income or stated value, and everything has a full appraisal and is ATR compliant.
“It’s kind of lending 101, back to the three characteristics of credit; it’s collateral, it’s capacity, and it’s character, the three Cs, and we want to make sure we have balance in all those things.”
"We are thrilled to bring to market a loan product that helps more people achieve their dreams of homeownership," said Embrace Home Loans CEO Dennis Hardiman in a press release. "beyond is more than a smart, timely response to today's affordability challenges. By expanding homeownership opportunities, we're helping more families attain long-term financial stability-and that's what we are about."