It’s achieved not only through the alchemy of accounting, but a decidedly human approach that the most sentient AI could never muster, including “…ingenuity and common sense, instead of a narrow set of criteria,” as the company asserts on its website.
Davis echoed the sentiment, noting that the changing face of America reflects the growing need for non-QM lending. The ideal of entrepreneurship for which America is widely known – heightened in the wake of pandemic – elevates the need even more.
“America is an entrepreneurial country,” Davis said. “A lot of people have multiple jobs – two or three jobs – in this gig economy, and that’s evolved and grown. You have to look at income loans a little bit differently than your traditional W-2s.
“There are different ways to calculate income versus the traditional agency methods,” he said. “We look at bank statements, both personal and business. In that, we take a very forensic view in understanding the cash flow, deposits, expenses and the type of business. We use assets – stand-alone or augmented. For investment loans, we can document income using a P&L or the cash flow from the property to qualify the loan.”
There are options for borrowers investing in rental properties. When referring to the use of the debt service coverage ratio in measuring cash flow to pay debt obligation, Davis said: “Borrowers have the option of documenting their income using the cash flow from the rental property. If the appraiser says the market rent is $1,500 and the proposed monthly mortgage payment is $1,400, the market rent covers it,” he added, referring to the use of the debt service coverage ratio cash flow to pay debt obligations.