We offer the Alt A mortgages and Alta A lending guidance. These types of loans are for self employed borrowers. The rates are much better than private money but not as good as A paper loans. The rate difference with Alta A mortgage and conditional lending may be as little as a half of percent. We have been considered one of the top alternative mortgage originator for non-traditional home loans.
An Alt-A mortgage, short for Alternative A-paper, is a type of U.S. mortgage that, for various reasons, is considered riskier than A-paper, or “prime”, and less risky than “subprime,” the riskiest category. For these reasons, as well as in some cases their size, Alt-A loans are not eligible for purchase by Fannie Mae or Freddie Mac. Alt-A interest rates, which are determined by credit risk, therefore tend to be between those of prime and subprime home loans, although there is no single accepted definition of Alt-A. Typically Alt-A mortgages are characterized by borrowers with less than full documentation, lower credit scores, higher loan-to-values, and more investment properties. A-minus is related to Alt-A, with some lenders categorizing them the same, but A-minus is traditionally defined as mortgage borrowers with a FICO score of below 680 while Alt-A is traditionally defined as loans lacking full documentation. Alt-A mortgages may have excellent credit but may not meet underwriting criteria for other reasons. During the past decade, a significant amount of Alt-A mortgages resulted from refinancings, rather than property purchases.
Alt-A loans should be not be confused with alternative documentation loans, which are typically considered to have the same risk as full documentation loans despite the use of different documents to verify the relevant information. As with subprime mortgages, a greater portion of Alt-A mortgages tend to be originated by specialized lenders, rather than banks and thrifts.
After 2007, the availability of alt-A loans disappeared when lenders who were making these loans stopped or went out of business and the primary sources of mortgage funding became the government-backed companies Fannie Mae and Freddie Mac. Freddie and Fannie were only purchasing loans that met the prime rate standards. Although the alt-A lending channel had been abused by lenders and borrowers during the real estate boom, the channel did provide a mortgage funding source for borrowers with unusual income streams. The lack of alt-A mortgage sources makes it difficult for the self-employed and commissioned employees to qualify for a mortgage to buy or refinance their homes.
To find out more see our “Hot Loan Products” for rates and guidelines.
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