100% LTV on Stated Income Investor Properties

PMAC Lending Services Inc. recently announced it started offering 100% financing on 1-4 unit, nonowner occupied properties and second homes.

According to the California-based financial services provider, the popularity of financing programs for property investors has “risen tremendously since the early 90s.” One major obstacle facing consumers who would like to own rental property, however, has been the typical 20% down payment required to finance the investment properties.

PMAC’s programs allow the purchase of such properties with no down payment, on sales prices to $1 million. The programs include an interest only option and loan type options of 2-, 3-, and 5-year adjustable-rate mortgages or 30-year fixed rate mortgages that do not require mortgage insurance, the California-based lender reported.

“PMAC created these programs to take advantage of a shift in the marketplace,” commented company chief executive Jon Magill in the prepared statement. “We developed these 100% programs to allow investors with ‘good’ credit to qualify with either full-documentation or stated-income. The process is simple and takes about the same amount of paperwork and time as a standard mortgage.”

Under the stated-income program, 100% combined LTVs for 3-4 unit nonowner occupied properties allow a minimum credit score of 720, and 95% CLTV on 3-4 unit investor loans require at least a 680 FICO, PMAC said in an e-mailed statement to MortgageDaily.com. The company provides both first and the second mortgage.

For full-documentation loans, 100% CLTV nonowner occupied 3-4 unit properties have a 660 FICO score minimum requirement, while for 80% LTV nonowner occupied loans for similar properties its a 620 FICO, according to the statement.

Maximum debt-to-income ratios are 45-50%, and the program is currently available to brokers in California, Nevada, Arizona, Colorado, Oregon and New Mexico, the statement said.

PMAC, which pitches its programs at www.PMAC.com, said it believes that its zero down program will prompt real estate offices to form investment property divisions that specialize in rental and investment properties as it facilitates the selling of additional properties to real estate agents’ client bases of primary residence borrowers.

But, such a program is “no big deal,” according to Al Rodenburg, a Houston, Texas, branch manager for Challenge Financial Investors Corp., which he says has 400 independent branches and is licensed in 47 states.

The 100% stated-income and full-doc financing for nonowner occupied properties has been around for at least four or five years, Rodenburg said, adding that only “the fact that there are a lot of people who aren’t aware of it makes it new.”

The manager said that although over 99% of brokers focus on primary residences, he chose to go with investors — over 90% of business at his branch is based on high-LTV investment properties.

PMAC says it also offers 100% stated subprime, 107% purchase loans and 103% up to $650,000 with no mortgage insurance.