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Special Reports
Jumbo and Nonconforming Lending
Observer Says Nonconforming Loans Are Available
By Bonnie Sinnock
The wave of global credit disruptions stemming from much-worse-than-expected U.S.
subprime/nontraditional mortgage performance hasn't completely washed out the jumbo/nonconforming market - although
some may feel like it has, according to Rob Pommier, senior vice president at West Palm Beach, Fla.-based origination
technology provider OpenClose. "I talked to a broker today that I've known for many years and she actually
told me, 'I have these six loans, they're all jumbo loans and I have no idea what I'm going to do with them,'"
he said, adding that the broker said wholesalers she talked to also seemed to be at a loss as to what to do with
the mortgages.
Despite such perceptions, the truth is that certain jumbos, relatively high loan-to-value
products and subprime credit mortgages can still be found and funded Mr. Pommier told this publication in a phone
interview from his home office here. Jumbo and nonconforming products underwritten to the relatively tight market
standards seen six or seven years ago are still being made, he said. At that time as now, borrowers could qualify
for a jumbo loan if they had "decent credit" and "a couple months of reserves in the bank,"
he said. "Are there high LTVs available? Yes just ask a mortgage insurance company. They're still insuring
them, but they're not going to do it for the less than desirable borrower," he added. In addition, loans are
still available to those "with less-than-acceptable credit," but within that category there generally
is some kind of requirement to show the borrower has ownership of a certain amount of assets, Mr. Pommier said.
That being said, given the market's upheaval, it's only to be expected that certain
types of products can't be found at all anymore. For example, mortgages "where you could have less-than-perfect
credit and get 100% loan, those are not available," Mr. Pommier said.
The OpenClose executive said he is in a position to know about what's hot and
what's not in the jumbo/nonconforming space because his company provides technology that helps funding originators
communicate with the so-called point-of-sale in the process of matching borrowers with available loan programs.
Efficient and accurate communication between the two types of originators has
been part of the challenge when it comes to jumbo/nonconforming space these days as loan programs have changed
quickly and dramatically, as Mr. Pommier's story about the broker who was finding it difficult to place jumbo product
shows.
Mr. Pommier said his company's automation can help when it comes to that portion
of the jumbo/nonconforming market's challenge by allowing POS originators to submit information about potential
borrowers and match it against information on their investors' loan programs, not only letting them know whether
their loan qualified or not, but letting them know why it didn't, making it easier to possibly request from the
borrower additional information and/or a change in terms that may allow the loan to be made. POS originators still
have to identify the investors they work with themselves, but may find the process of getting and using information
from their investors easier.
When it comes to the challenge of identifying investors with suitable programs,
Mr. Pommier's advice is talk to mortgage insurance representatives, document service providers or other market
participants that may have pertinent information in this area.
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