A new jumbo offering from a wholesale lender out of California is reminiscent of alternative-A programs offered before such products were expanded to subprime borrowers.
In the 1990’s, a borrower with a high net worth could qualify for an Alt-A loan without necessarily providing proof of income.
Such programs made sense for busy borrowers who had plenty of assets but didn’t want to spend time going back and forth with lenders on income documentation. They also made sense for lenders because the borrowers had high credit scores and made big downpayments.
On Wednesday, Kinecta Federal Credit Union issued a news release promoting its new “asset utilization loan program.” The loan is geared to self-employed and retired borrowers who have “significant liquid assets” and a high net worth.
The product allows borrowers to count a share of their assets as income in order to qualify. Among assets that can be used to qualify are checking accounts, savings accounts and certificates of deposit. Stocks and bonds are also acceptable as are 401K plans and investment retirement accounts. Even insurance policies with surrender values are eligible.
“All must be fully documented and held in U.S. financial institutions,” the statement said. “Annuities, trust funds and hedge funds also may be used as long as there is evidence that the funds are available to the borrower.”
Todd Helmerson, director of wholesale loan production for the Manhattan Beach, Calif.-based institution, explained that the new offering helps borrowers with complex income situations.
Acceptable loan amounts range from $417,001 to $3 million. The product is available on 5/1, 7/1 and 10/1 adjustable-rate mortgages.
The $3.5 billion credit union launched a wholesale lending division in February. In May, Kinecta announced that it was doing business with mortgage brokers in 25 states and expected to have a staff of 50 account executives by the end of the year.