A small, but savvy, group of lenders has found that targeting super jumbo borrowers is a great way to expand their business. Although the incidence of super jumbo loans is quite small compared to the average mortgage loan, and the ease of closing a super jumbo loan has historically been more difficult than closing a conforming loan that fits into an automated underwriting system (AUS), the rewards for funding a $1 million or larger loan are higher. Unlike a conforming loan that fits inside a black box AUS and is readily acceptable to a warehouse lender or the typical investor, a super jumbo loan often needs to be tailor-made because the borrowers tend to be highly sophisticated and have complicated financial situations. These handcrafted loans are often not acceptable to the usual investor or warehouse lender. But for the lender that is willing to spend the extra time to reap the extra benefits, the super jumbo loan category can be exceptionally lucrative.
So, how do you go about participating in this large loan arena? First and foremost, you need to identify an investor partner that specializes in purchasing super jumbo loans. Typically, this investor needs to be a portfolio lender that specifically caters to borrowers with high-dollar, complex financial needs. The investor needs to follow a policy of crafting personalized loan solutions for borrowers who use mortgages as financial planning tools.
Additionally, the investor should apply a commonsense approach to underwriting a loan and not be a slave to a black box AUS. Sophisticated borrowers needs dont fit inside an AUS. They are often self-employed and have a large part of their net worth tied up in their companies. Alternately, the largest part of their income may come from bonuses and profit sharing, rather than salary. Their credit scores might be suppressed because they have loans on a large number of real estate properties.
The super jumbo investor needs to be flexible, and the right investor partner can revolutionize the quality and size of your business.