How Non-Resident Aliens Can Get a Mortgage

In this episode with Fred Glick, Cari from AXOS Bank, Rene Perez, Jr, Cari is interviewed about all the non-traditional ways you can be approved for a mortgage. 

Cari discusses how non-resident aliens can find themselves in a difficult situation when they want to buy a house. They may not understand the process and experience difficulties with their lack of permanent residency status or verifiable income. However, there are ways for them to purchase property in the United States and AXOS bank has differing requirements than traditional lenders. They essentially write their own rules.

We Fixed Real Estate Season 2 Episode 3 Transcript

Fred:

Hello, everybody, and welcome to today’s We Fixed Real Estate. We’re somewhere in our second season, I don’t know what episode this is. But we wanted to get into talking about mortgages, that’s a hot topic, all the time, forever. And what’s going on with the jumbo market, especially in California. And we have with us a special guest today. Now, this special guest is nobody that you can call and talk to, I just want to say that because she works as what’s called an account executive for one of our host [inaudible 00:00:41] lenders, so you come through us and we go to her, but we’re kind of giving the back end of this with her knowledge to help you out if you’re looking for a jumbo loan and either thing are perfect or weird. So we’re going to get into that. It’s Cari Anderson, and Cari works for a company called Axos, A-X-O-S, that used to be called Bank of the Internet.

Fred:

Okay, so Cari, the interesting thing about Axos generically, and I’ll have her talk a little more in detail, is they’re a bank, they have their own paper, which means they can make their own decisions. Which is different than you going to the likes of Chase, Wells Fargo, et cetera. Yes, it’s a bank, but they have extremely strict guidelines and they can’t mess around with any of them because even they end up selling the mortgages on the secondary market, but that’s a whole different podcast and we’ll get into that later. So the new Fannie Mae limit in the big major areas, San Francisco, Los Angeles, Orange County, is now going up to 937,500. One dollar over that is the jumbo limit. It’s going to be a little lower in San Diego, but we don’t know what that number is yet because they don’t release it until the end of November, we’re doing this at the beginning of November 2021. But if you go to conforminglimits.com, once we know what the ’22 numbers are, they’ll be in there for any county in the entire United States. So conforminglimits.com, a great site to just see what the limits are for a one-bedroom, two-bedroom, three-bedroom, four-bedroom.

Fred:

Anyway, moving on. So Cari, do you guys only do jumbo with your portfolio product or do you do loans under the jumbo?

Cari:

That’s a great question, yeah. No, that’s a great question because this product is considered a jumbo loan, however, because we don’t sell to the agencies like Fannie or Freddie or any other investors, we do kind of write our own rules. So the actual minimum loan amount that we will fund is 500,000, which is well below the jumbo limit. And it actually means that we can serve more than just the jumbo borrower with this particular program. And we have lots of niches that will help people that don’t qualify for traditional financing, even below the new higher jumbo limits. So 500,000 is the minimum.

Fred:

Got it, cool. Okay, so you have your, I’ll call it plain vanilla 30 year fixed rate, which I checked today I like 3% with a rebate of about 2,500 dollars as a ballpark. Again, rates change every freaking hour, so don’t say [crosstalk 00:03:36]

Cari:

It does. No, that is a true jumbo loan, that is not a portfolio product. So on my portfolio, it’s arms only, and that will go down as low as 500. The prime jumbo 30 year fixed has some terrific interest rates, but yes, you do have to be a dollar above the conforming limit now.

Fred:

Okay. So let’s talk about, let’s get away from the vanilla jumbos we all know and [crosstalk 00:04:05] rate shop and blah blah and we’ll get into the other problems with that later. But give us examples of the type of people that should be using your product and what your product is and why your product is, et cetera. So just go.

Cari:

Yeah. So like I hinted at, we are a niche lender, meaning we do things that are out of the box that is going to be different from what most of the retail banks and other lenders will tell you you need to follow as far as guidelines go. So we basically write our own guidelines. We do keep these loans on our books, we service them, we do not sell them. So within reason, we can make exceptions to the guidelines that we’ve already written. And that just gives us a lot more flexibility. And what happens very often is people get in a contract, they get a preapproval from a lender, and then they go down the path of underwriting and find out that, “Well, I’m sorry I can’t count this income for you because you don’t have a full two years of it, or it’s a specific type of income that we don’t allow,” or whatever the case. And now you’re stuck and you’ve got a ticking clock on your close of escrow. So many times I will come in and save the day.

Fred:

Okay. Let’s first talk about that. We’re psychotically nuts about selling our clients, they have to be fully underwritten, preapproved in order to even put an agreement in. And I just took a look at the brand new purchase agreement that’s going to be used starting in December in California, and it’s interesting because, in the mortgage section of it, it will now ask the question that you have to answer which is, “Is the loan prequalification, preapproval or fully underwritten preapproval?” So this is going to make bidding a lot more interesting because if somebody has a higher amount but they’re only preapproved or prequalified, but we’re in at a fully underwritten preapproval with less money, we may get the deal because of it. So it’s starting to get really interesting. Now let’s talk about what you do. You do not do full preapprovals, but what Cari told me on the phone the other day, correct me if I’m wrong, is she will literally take your income and your assets as an account executive who’s been doing this for, I think you said 12 years with them?

Cari:

Well, 11 years with the bank, but I’ve been in the industry for 25 years.

Fred:

Oh, okay. Well, I thought you were only 29 years old, you started as a child, amazing.

Cari:

Yeah, well you know. I was a child prodigy.

Fred:

There you go. So what she will do is look at your situation because, again, these are going to be the loans that aren’t perfect maybe to the vanilla lenders, but here we got a little strawberry shortcake, she’s going to be able to say, “Yeah, it’ll work.” It’s not a full, full, full underwritten preapproval as I’d love to have, but it’s darn near close and we can have a preapproval with even a letter from her saying, “I’ve looked through and reviewed, blah, blah, blah.” So that’s really important these days. But okay, why don’t you go on? Let’s talk a little bit about the reasons that people come to you. And I think the biggest one is income. And one of the biggest income that a lot of people have are RSUs, restricted stock units. Meaning you go to work for the XYZ startup and they say, “Okay, we’re going to be getting stock every year.” So normally when you go to the biggies, they’re going to want probably three years of RSUs to be able to count them. Some of them will go two, but Cari, tell us about you.

Cari:

Yeah, and I should qualify that the stock does have to be publicly traded. So you have to work for a company that’s public that we can evaluate the stock and you can show proof of vesting and all that good stuff. So once you have a grant of stock, it’s usually best over a specific number of years, typically four years, we look at basically the last 12 months of vesting. If you have at least 12 months of vested, publicly-traded stocks from your employer, that is actually taxed as income, and so we will give you that income as long as you can prove that it’ll continue for two years. And most clients that come to me with significant RSU income that they need to qualify with do have that continuant. So we’re much more concerned about it going forward at least two year than whether or not you’ve been getting it for the last two or three years. We do like a little bit of comfort level to see that you have had your shares start to vest, but I’ve gotten exceptions otherwise and sometimes people go from company to company in the tech world where their biggest compensation above their salary is restricted stock grants. So if you have a history of it and you’re at a new company and you just haven’t had that first round of vesting, it’s not necessarily a disqualifier, so everything with us is case by case.

Fred:

Cool. I guess the next biggest thing is the self-employed because they’re a nightmare. So I know Fannie Mae, Freddie Mac, they want you to have a PNL every 15 minutes signed off by three CPAs, and it’s just nuts. So can you kind of give us an overview of what it’s like going with you for self-employed and [crosstalk 00:10:02]

Cari:

Well, one of the greatest things we can do for self-employed borrowers is just giving them a loan based on 12 months of bank statements. And I’m sure most people have heard of the term non-QM, meaning little left of center and the underwriting is a little different than traditional full docs. We can do 12 months of business bank statements and take a percentage of those deposits and use that as income. If you’re down payment is large enough, and it’s usually a 35% down payment for doing that, then great, we don’t have to worry about your tax returns or PNL or anything to that effect. If you don’t have that much down though and you need a smaller down payment, we can still make exceptions for self-employed borrowers. Sometimes you don’t have a full two years under your current structure. Maybe you went from a sole proprietorship and you incorporated or opened an LLC and you don’t have two years of that, that’s okay with us.

Cari:

The other thing that we all know is that last year kind of was not a great year for a lot of self-employed borrowers, and we know that 2020 is not always going to look as rosy as maybe they’re looking now, and we can give them a year to date income for qualifying even though they obviously haven’t filed 2021 taxes yet, we’re not at the end of the year. But if you provide a PNL, and it does not have to be signed by a CPA, self-prepared PNL, and you give us a couple of months of your business bank statements to substantiate and support that PNL, we’ll bring in that income to help you qualify. So even though we’re not even done with 2021 yet, if it was better than 2020, you’re going to get that benefit in qualifying with us.

Fred:

Cool, cool, cool. I assume off the top of my head that all these loans you need at least 20% down, correct?

Cari:

With us it’s actually 30, sometimes 25. But that’s the exchange for the flexibility that we have. Most of the loans I do are at 70% loan to value, so 30% down. And that’s the portfolio flexible stuff, obviously our prime more conservative jumbo will go higher to 80.

Fred:

Got it, got it. Let’s talk about those assets, is there anything that you accept as assets that other people don’t, like gifts from friends as opposed to gifts that have to be from relatives? Or is there anything on the asset side that you have different?

Cari:

Yes. And you kind of hit it right there, we’re not going to be strict about the gift coming necessarily from a family member if there’s a relationship there and it’s non-arm’s length. Also, we do have a way to qualify your borrower based on their assets, it’s called asset depletion or asset utilization. Where maybe you’re not self-employed, maybe they just have a lot of savings and you’re falling short of qualifying for the loan amount that you need, if you have a really good amount of savings over 500,000 left over after closing, we can monetize that into income without them really having to do anything with their assets. It’s just a formula that we use to impute extra income. So yeah, I would say there’s a lot of flexibility with assets. And we also allow cryptocurrency to count towards that income figure, believe it or not. If they sell crypto-

Fred:

That is interesting. I’m sure by next week you’ll be into NFTs.

Cari:

No.

Fred:

That’s a whole nother thing. It’s so confusing to figure that out, it’s beyond [crosstalk 00:14:06]

Cari:

I know. And we’re one of the only banks that will do that. In fact, I think as far as I know we’re the only bank that will allow that.

Fred:

Very cool. Hey, here’s another idea, just thoughts out of my head, let’s say someone wants to become an investor and they found a property and they’ll put 30% down, but they want to raise the 30% from crowdfunding, will that work?

Cari:

That I would have to say you’re going to have to let that sit in the bank for 60 days because that would be a lot of gift documentation, it would be kind of ridiculous, right? Very hard to document.

Fred:

Yeah, as opposed to just gifts, it’s a website and you can see who’s investing or something.

Cari:

Right, and those would each be a gift and we’d have to document it, which would be a nightmare. So you want to let that sit for a couple months and then go for it.

Fred:

Okay. So any money that comes into the account that’s not belonging to the person has to be called a gift and documented, correct?

Cari:

If it was in fact a gift like a crowdfunding type of source, yes.

Fred:

Huh, okay interesting. All right, let’s talk about the elephant in the room, which is appraisals. Everybody wants to know what the story is. So basically, there’s too much demand for too small amount of appraisers because it’s really hard to become an appraiser. So that’s been the biggest pain in the neck. So can you talk about both times, how you get these guys, what you’re looking for, is anything different?

Cari:

Well, most banks have their own appraisal panel and they have what they have. As you said, it’s supply and demand. If the demand is greater than the supply, you’re going to be waiting longer. We operate a little bit differently in that we engage the services of what is called appraisal management companies or AMCs for short. We have four vendors that we have available to our clients to use. So if one of them quotes an appraisal turn time that is just so far outside of your needs, you have three others that you can choose from. But that said, we all are still kind of fishing in the same pond, so it’s not always an issue of service or whether one is better than the other, it’s just like you said, it’s supply and demand. So right now, I find that it’s really localized, there are some areas where you can get an appraisal done in a very reasonable time frame, and then there are others, the busier areas, where it’s not that easy. I will say though, sometimes I will engage my own appraisal panel, and if they can get it done quicker than one of our appraisal management companies, we can step in and sometimes help. So what my answer is to that, in a nutshell, is that we have options, we have more than one option.

Fred:

Got it. Say we have a buyer, we’ve gone through the stuff with you and everything’s pretty much a go and we’re writing a contract and we write the contract, we have to put the number of days until the close of escrow. So I’m not asking you for a firm number, but in your organization, what’s a number that you’re safe with, and what’s a number you’re going to be aggressive with in terms of days?

Cari:

Safe I would say 30 days, and aggressive would be about 20. I do have some loans that I am able to get through in less than that, even the aggressive time frame, and it usually, draw on what we just talked about, it usually is because the appraisal’s already been done. So is the linchpin right now is appraisals. Our own processing and turn time is very swift. It’s really usually coming down to appraisals and how quickly we can get them.

Fred:

Got it, got it. That’s what we kind of figured. I knew the answer to this question, unfortunately. Fannie Mae is coming out and allowing the hybrid model, but I doubt you’re going to be doing that anytime soon where they have a desk appraiser.

Cari:

No, unfortunately not. Because we do deal with a lot of higher-end properties, unique properties, we need a full valuation on a lot of what we do.

Fred:

Got it, got it. You’re still a bank with a gun to your head. So we understand that. Is there anything else that you can tell us that you guys do?

Cari:

Yeah, absolutely.

Fred:

Fire away.

Cari:

We’re one of the few lenders out there that specialize in Bridge financing, so people who want to buy before they sell. That would be a whole other call and it would take some time to sort through the different options we have. But we do specialize in helping client buy before they sell with short-term financing that is not egregious. So if you have a purchase, we can [crosstalk 00:19:20]

Fred:

I’m sorry, here’s a question about that. Say I have a buyer, we’re licensed in California, they’re going to sell their property but they want to buy in Idaho and I’m not licensed in Idaho, is there a way to work through that in your system?

Cari:

Possibly, not as a purchase cross-collateral loan, which would be one of the options. The other option, if you weren’t licensed in the state where they’re buying, would be to do a bridge which is cash out on their departing and would really come down to how much equity they had in their departing.

Fred:

Oh, okay. Because it would kind of be cool if we could hook up with a licensed person in Idaho and split the commission or something. So who knows?

Cari:

There’s a way to do that, we can talk about that, but there is a way.

Fred:

Okay, that’s a different phone call. But the bottom line is people, talk to us about bridge loans. Basically, you can buy the new house as cash and not have to worry about it, sell your old house, and then pay everybody off and refinance and get it, or get just, I don’t know if you do where you give them the full-bridge plus the end loan. Who knows? But anyways. All right, well the bridge loans are good. So to wrap up, some of the big things here, the RSUs of one year is a really big thing, the crypto is another, and the bridge loans. So you got a lot of good stuff and hopefully, we can make some people happy. So don’t be scared of the real estate market, just be prepared for it. And this is another way we take away one of the pain points in trying to buy a house. And by the way, you guys, you do refinance too, we’ll let everybody know. Same programs and all that. So if you got something weird and a crappy rate, give us a buzz.

Cari:

We also don’t limit cash out, so if you have a lot of equity in an investment property or your own property and you need a good chunk of cash out, most investors and lenders cap it at 500,000, some less. We don’t have such a cap, so as long as you have a nice equity position, we won’t cap how much cash out you can take a long as you qualify.

Fred:

Yep, sounds awesome.

Speaker 3:

Well, I was actually [crosstalk 00:21:55] question.

Cari:

I was like, “Who’s that?”

Fred:

Okay, and [Renny 00:21:58] finally said something. Go ahead, Renny.

Speaker 3:

Yeah, so Fred, as we talk about being prepared, my question is, and we get this a lot, we see a client Monday morning who comes in with a house and they want to put an offer in but they’re not preapproved, and we talked about how being aggressive means a 20-day closing, how long does the underwriting take to your lending?

Cari:

That varies from lender to lender and even week to week within a lender. We try to be as quick as possible, obviously, but turn-times are driven by volume, so that can change. Right now, it usually takes about three business days for a loan to get underwritten.

Speaker 3:

[crosstalk 00:22:50]

Fred:

And what’s the bad, how long if you’re really busy, seven?

Cari:

I’ve seen it creep up towards five to seven days, but not any time recently. However, I do think that that’s kind of shifting because the last few years you’ve been dealing with lenders who are overextended due to just regular refinances, the conforming stuff, and so we’ve been less busy and our turn times have been very, very swift. But of course, when those things start to dry up, which is the prediction for next year and purchases are going to come to the forefront again, I think we’re going to see our turn times creep up, and then maybe a 30-day close will be the norm.

Fred:

Got it. Yeah, there’s no answer out there until we solve the appraisal problem.

Cari:

That’s true. That’s another variable.

Fred:

Here’s a suggestion for a hybrid for you guys, have a desk review but the account executives go out and look at the properties.

Cari:

Yeah, that would be fun. And we do our own desk review anyways, so we’re pretty heavy on valuation. Because like I said, we’re usually dealing with high-end luxury properties and acreage and things that you just can’t do from a desktop. So we [crosstalk 00:24:21]

Fred:

Yeah, I understand. I’m just trying to come up with something because it’s a pain. Anyway, Jenn do you have any questions? I know we haven’t been over her portal or anything like that, but maybe will Cari will take some time and explain to Jenn and me, not right now.

Cari:

I have actually a prerecorded tutorial on that I can send you the email that has that.

Fred:

Oh, excellent.

Speaker 4:

that would be perfect.

Cari:

Yeah.

Fred:

Yep, I mean Jenn, you just have to tell her one time and she does it, she’s perfect about that.

Cari:

Oh yeah, and I think as far as these systems go, it’s really simple.

Fred:

Cool, cool. You disclose out, correct?

Cari:

Yes.

Fred:

Okay, good. I hate disclosing anything that I don’t have to.

Cari:

Yeah, no we do everything.

Fred:

Cool, cool. All right, hey thanks so much, and hopefully we can throw some loans to you and get this all rocking.

Cari:

Yeah, all right. Well thank you, let me know if you need anything else.

Fred:

Will do. Thanks so much.

Speaker 4:

Thanks.

Fred:

We’re talking with Cari of Axos Bank.