Assets Based Texas Mortgage Lenders

What is an Asset-based Mortgage Lender? 

Asset based mortgage lenders are also known as an asset depletion mortgage lenders, asset based mortgage applicants are granted a loan based on their savings assets. An asset-based loan or mortgage allows asset based mortgage applicants to utilize the assets already invested in to secure the cash you need now. Asset-based mortgage lenders are perfect for retirees, investors, and/or self-employed asset based mortgage applicants that have assets on-hand. Asset Based Mortgage Lenders guidelines are  outlined in these guidelines are consistent with the Dodd Frank Wall Street Reform and Consumer Protection Act’s requirement that a asset based mortgage applicants have the Ability to Repay the mortgage loan. Documentation standards are designed so that loans are made to asset based mortgage applicants who have demonstrated the ability and have the wherewithal to repay the debt.  Asset based mortgage lenders  require  documentation to ensure that the loan meets Ability-to-Repay (ATR) standards. In regard to any underwriting criteria not specifically addressed in this document, Fannie Mae standards apply. asset based mortgage applicants

ASSET BASED TEXAS MORTGAGE LENDERS 
Asset Based Mortgage Lenders loans allow a quicker qualification based solely on the borrower’s seasoned, liquid
assets. They require the borrower to have a level of seasoned, liquid assets sufficient to satisfy the entire
principal balance of the proposed mortgage, as well as all other expenses for the next 5 years. This
requirement is in addition to any funds required for the down payment, closing costs, as well as any reserves
that may be required by the product type. Asset Based Mortgage Lenders program is only available for loans on properties
which are going to be owner occupied.Income and employment are not verified, and do not need to be disclosed on the borrower’s application. Loans qualified under the Asset Based Mortgage Lenders program are not subject to Residual Income calculations.

ASSET BASED TEXAS MORTGAGE LENDERS EXAMPLE

$2,000,000 in checking account
$1,000,000 in money market account
$2,000,000 eligible=$1,000,000 in stocks and bonds held in a brokerage account X 90% = ($900,000 eligible)

$2,900,000 in eligible assets = TOTAL QUALIFYING INCOME
$2,900,000 in eligible assets / 60 months = $2,610,000 in monthly qualifying income

 Eligible Assets – TEXAS Asset Based Mortgage Lenders
All qualifying assets must be held in a bank or brokerage account. All accounts must be personal accounts
in the borrower’s name or assets held in a revocable inter-vivos trust where the trustee is the borrower and
the trust was established to hold the borrower’s assets. Business accounts that are 100% controlled by the
borrower are acceptable provided that documentation can be provided that the withdrawal of funds will not
impact the business. All parties on shared accounts must be borrowers on the proposed loan. As noted
above, all assets must be seasoned for six months for the Asset Based Mortgage Lenders program.

 Ineligible Assets – TEXAS Asset Based Mortgage Lenders
• Funds held in trusts other than a revocable inter-vivos trust identified above
• Individual stock certificates
• Individual bearer bonds
• 401(k) or retirement funds designated for distribution
• Cash on hand (mattress money)
• Equity in real estate or privately-owned businesses
• Illiquid or non-financial assets

Eligible Assets Type For Asset-based Mortgage Lenders 

Assets approved by asset based mortgage lenders can include cash in the bank, stocks, bonds, IRAs, 401Ks, mutual funds or retirement accounts. For most asset based mortgage lenders would include all pages of the most recent asset accounts. Asset levels in the verified asset accounts are expected to be consistent and sustained over a determined period of time. Increases or decreases of greater than 15% over the six (6) month period (i.e., compare month 1 to month 6) must be explained by the borrower.
Additional supporting documentation may be required.
 Bank Deposits – Checking, Saving, Money Market accounts = 100%
 Publicly traded stocks and bonds = 70% (stock options not allowed)
 Mutual Funds = 70%
 Retirement Accounts (can only be used if distribution is not already set up)
o 401(K) plans or IRA, SEP or KEOUGH accounts = 60% if not retirement age, or 70% if
retirement age and no early withdrawal tax penalty applies.
 Cash value of a vested life insurance policy = 100%
o When used for reserves, the cash value must be documented but does not need to be
liquidated or received by borrower
Note: Assets must be in liquid or semi liquid form, no privately held stock, deferred compensation or nonregulated financial companies. Any debt tied to an asset must be netted out (example: stocks bought on
margin or 401K loan against the 401K account).
Ineligible Asset Types:
 Business funds
 Non-liquid assets (automobiles, artwork, business net worth etc…)
 Annuities of any type
 Face value of a life insurance policy
 Foreign Assets
Residual Income: In accordance with ATR standards, a monthly residual income calculation must be
completed. The formula for this calculation is:
 Total Assets (as detailed in Eligible Asset Types above) / 60 months = Total Monthly Income
 Total Monthly Income – Total Monthly Debt Obligations (Expenses) = Monthly Residual Income
 Monthly Residual Income must meet or exceed the following requirement:
o Minimum of $2500 + $150 for each additional family member.
Note: Required reserves are not deducted from Total Assets when calculating residual income.

Eligible Vesting Asset-based Mortgage Lenders 

Vesting in the name of an individual(s) or an Inter Vivos Revocable Trust is allowed provided it meets the
following requirements:
 Inter Vivos Revocable Trust:
o Must meet Fannie Mae requirements
o Only trusts with natural person members are allowed
Ineligible Vesting:
 LLCs
 Corporations
 Partnerships
 501(c)(3) organizations
 Trusts or LLCs whose members include other LLCs, corporations, partnerships, or trusts.
 Trusts or LLCs where a Power of Attorney is used.

Eligible Asset Based Property Types

 1 unit attached and detached SFR and PUDs
 Condominiums
 2-4 units
 Leasehold Estates (must meet Fannie Mae Guidelines)
Ineligible:
 Condo hotel
 Non-warrantable condo
 Co-ops
 Income producing properties with acreage
 Manufactured housing
 Modular homes
 Working farms, ranches or orchards
 Vacant land or land development properties
 Properties that are not readily accessible by roads that meet local standards
 Properties that are not secured by real estate such as, houseboats, boat slips, timeshares, and other
forms of property that are not real estate
 Boarding houses
 Bed and breakfast properties
 Properties that are not suitable for year-round occupancy regardless of location
 Properties located in Hawaiian lava zones 1 and 2
Unique Properties: May be considered on a case-by-case basis whereby additional restrictions may apply (e.g.
max LTV of 80%). In all cases, the appraisal must provide similar comparable sales and address any
marketability concerns. Following are unique properties that may be considered on a case-by-case basis:
 Acreage greater than 10 acres.
 Agricultural zoned property.
 Log Homes.
 Mixed Use
 Properties subject to oil and/or gas leases
 Condo Project Reviews: Follow Fannie Mae guidelines for Project Review Waivers, Limited Reviews,
Full Reviews (with or without CPM) and PERS Final Approvals. FHA approved condos are not
permitted. Co-op and manufactured housing projects are ineligible. Non-warrantable condos are not
allowed.

Eligible Asset Based Mortgage Applicants

 U.S. Citizens
 Permanent Resident Aliens
 Non-Permanent Resident Aliens
o Must have one of following visa categories: E, G, H, L, O, P, or TN
 Inter Vivos Revocable Trust
 First Time Home Buyer (subject to maximum payment shock of 250%)
 Privacy Trusts (considered on case-by-case basis)

Ineligible Asset Based Mortgage Applicants

 Borrowers with a U.S. student visa. Student visa types include: F Visa (e.g., F-1, F-2, F-3), J Visa
(e.g., J-1, J-2), and M Visa (e.g., M-1, M-2, M-3).
 Foreign Nationals
 Land Trusts
 LLCs, Corporations and Partnerships
 Nominee or Blind Trusts
 Non-occupant co-borrower

Asset Based Mortgage Program Qualifications 

This program is designed for asset based mortgage applicants who have significant verifiable assets and would benefit from alternative loan qualification methods. Asset statements alone (no debt to income ratio is required) may be used by high net worth individuals for qualification.
NOTE: Loans that are eligible for sale to a government-sponsored enterprise (GSE) – the Federal National Mortgage Association (Fannie Mae) or the Federal Home Loan Mortgage Corporation (Freddie Mac) – are ineligible for any NQM Series programs.

What is Considered an Asset for a Loan?

The types of liquid assets that can be used as collateral n are checking accounts, savings accounts, certificates of deposit (CDs), money market accounts, mutual funds, stocks, and bonds. While in most cases several assets will be needed for collateral, there may be instances where a single asset will suffice. In some cases, asset statements alone may be used by high-net-worth individuals for qualification. Most importantly, the assets presented for your loan must be easily convertible into cash.

Asset Based Texas Mortgage Lenders 

• Qualified based on verified liquid assets
• Loan amounts up to $3 million
• Minimum 600 credit score
• No employment or income (Ability-to-Repay (ATR) is determined by assets and may be used in combination with bank statements in some cases if assets alone do not suffice)
• No tax return or 4506T required
• Debt to Income (DTI) Ratio not calculated
• Interest Only available
• As little as 10% down payment
• Cash out allowed
• Griffin Funding takes a common-sense approach to underwriting asset-based loans for a painless application process.

How does an Asset-based Loan Work?

With this type of lending, you will be borrowing against your assets. The amount you are granted for your loan, known as the borrowing base, will be established based on a percentage of the assets’ value.

For your asset-based mortgage, you can use 70% of what you have in retirement and investment accounts and 100% of liquid assets, the value of your bank accounts.

The borrowing base and loan terms will be determined by the lender.

Calculating Your Asset-Based Loan

To calculate the qualifying amount of your asset-based loan, you will need to determine your maximum monthly loan payment. First, you need to calculate the total value of your available assets. Then, divide the total by the duration of the loan in months.

For example, you may have $600,000 in liquid verifiable assets and your total mortgage payment is $10,000 per month. Since you have 60 months’ worth of assets you would qualify and meet the ability to repay requirements.

Benefits of an Asset-Based Financing

As with any type of borrowing, there are pros and cons to an asset-based loan.

The primary benefit of an asset-based loan or mortgage is that you can make use of assets you already have, regardless of your current financial status. This means that your current income will not be factors for loan approval. Asset-based mortgages are designed for home buyers and homeowners who have significant verifiable assets and would benefit from alternative loan qualification.

Unlike a reverse mortgage, you are allowed to apply for an asset-based loan for a second home that is not your primary residence. While asset-based loans typically have higher interest rates, Griffin Funding has access to wholesale asset-based mortgage rates for the most favorable loan terms.

Small to mid-sized businesses that are growing rapidly can also benefit from asset-based home loans because this type of lending will allow you to maintain the working capital you need to keep up with the growth of your business. Business owners can do a asset-based cashout refinance home loan to fund their business.

Risks of Asset-Based Financing

The most significant risk of asset-based financing is that if you default on your payments, you can lose your assets. Additionally, depreciation of an asset’s value will affect your loan terms. For instance, if your home’s value goes down, more collateral will be required. This can lead to hardship if you have already turned over all or most of your assets when originally qualifying for the loan. Here at Griffin Funding, this is not a risk since we do not require you to “pledge” your assets like most banks do.

Secure Your Asset-based Mortgage or Loan

Asset Based Mortgage Loans must be manually underwritten and fully documented. All loans must be underwritten in compliance with the Ability to Repay standards set forth in 12 C.F.R. §1026.43. For additional topics not specifically or fully
addressed by 12 C.F.R. §1026.43 guidance or herein, Fannie Mae underwriting guidelines should be followed
The underwriter must be comfortable that the borrower is able to repay the loan and that belief must be
supported by information from independent third parties. All factors in the loan file must be viewed in totality to
reach this conclusion.

Employment-Related Assets as Qualifying Income

The following table provides the requirements for employment-related assets that may be used as qualifying income.