Setting New Precedent for Bank Statement Mortgages
While each financial institution can determine their own lending programs (assuming they fall within the current legal requirements), some can drive change across the industry by introducing bold ideas. In one such move, Citadel Servicing Corporation, a California-based lender, has removed the 24-month bank statement qualification from their non-prime loans. The remaining qualification requirements for bank statement loans are still quite stringent - understandably so, as they offer loans up to $5 million. Borrowers can qualify with 12 months of bank statements, or in some cases, just the most recent month's statement. These programs still include up to 90% LTV, but are adding agility for self-employed, 1099, and other nontraditional employees to find home loans. The specifics of Citadel's programs are a bit beside the point, however. The real message here is that doing away with the 24-month requirement may prompt other institutions to do the same, thereby setting a new precedent for similar lenders, and changing the landscape of home loans for nontraditional borrowers. Only time will tell if (and when) other institutions follow suit, but for those with recent windfalls in their businesses, new growth in their careers, and so on, the shorter bank statement requirement could make a huge difference in securing home loans, and making higher loan values more accessible. Much of this goes to show how the economic landscape is changing, and that self-employment (or simply non-W2 employment) is here to stay. Citadel's move is an indication to lenders of all kinds that agile programs aren't just desirable and in-demand for borrowers, but also possible - and sustainable - for major lenders as well.