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Alternative Financing OptionsB/C/D Lending has become one of the fastest growing and rapidly changing arenas in residential mortgage lending. Niche lenders are offering programs today that were unavailable just months ago and unheard of a year It is also important to note that even borrowers with good credit often find themselves in a B/C/D or niche program. One such case may be a borrower with great credit but no way to prove his income, job or cash available. Another example may be a aspiring investor with little cash. The more obvious example would be a borrower with a slow payment history, charged-off debt, bankruptcy or very high debt with a limited income. All these potential borrowers now have the ability to purchase real estate, whether for a primary residence, second home or investment property.
B/C/D financing does not come without guidelines, but rather a much more expanded guideline. Below is an example of a program matrix which allows a lender to determine a borrower's credit grade. Match any late payments with the type of credit involved to find the level into which your loan would fall. |
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ago. Now more than ever, borrowers wishing to purchase a home can obtain financing. However, this financing comes at a premium. Most banks sell their loans on the secondary market to large investors like Fannie Mae and Freddie Mac. Money is returned quickly for new loans and premiums are made on loan servicing. In the world of B/C/D finance, lenders often keep the loans in their portfolio (hence the term "portfolio lender"). Often times, niche products come with pre-payment penalties attached, allowing the lender to reduce their losses due to default with high returns on loans paid as agreed. The higher the return, the higher the risk some lenders are willing to take. Of course, this translates for the consumer; the higher the risk to the investor, the higher your interest rate and costs of obtaining that loan.