It is tasked with cashouts for military members
In an age beset by pandemic, a more acute focus on accomplishments amid new challenges has regained the spotlight. At California-based ClearPath Lending Inc., it’s the achieved goal of 50,000 mortgage transactions since its founding nine years ago that is cause for celebration.
“When you deal with VA/FHA, you deal with very strict guidelines,” Adam Mercado (pictured), director of operations, said in a telephone interview. “You need to make sure that you know that.”
This year alone, new regulations by the Federal Housing Finance Agency overseeing Fannie Mae and Freddie Mac will enable qualified borrowers to take out larger loans by the government-sponsored enterprises. The move is fueled by historic home price appreciation that has redefined the industry.
The upshot: For single-family home buying next year, borrowers can secure up to $647,200 in conventional loans; $420,680 in FHA loans; and no limit on VA loans.
VA-guaranteed mortgages enable Veterans and active duty servicemembers to buy a home with no down payment. Those who have served the country, as well as their families, are entitled to use the VA mortgage benefit.
With FHA-insured mortgages, homebuyers with lower credit scores can purchase a home with only a 3% down payment. FHA loans are available to all qualified borrowers, although there are loan limits based on the county in which the borrower lives.
The main idea behind the rules, Mercado said, is “…we’re putting every borrower in a loan they can afford.”
As a leading VA home loan origination firm with a mission to serve the housing needs of the nation’s veteran, active-duty military and civilian families, the lender has a special charge serving customers who have served their country – a segment potentially vulnerable to exploitation by traditional lenders, Mercado suggested.
“You’ll see borrowers who come in from other lenders where the loan was unfortunately set up to fail because they weren’t taking everything into account,” Mercado said, stressing the importance in knowing first and foremost whether such borrowers qualify for those types of loans.
This is particularly true as it relates to cash-outs that occur when old mortgages are replaced with new ones with a larger amount than owed on the previously existing loan. When used properly, such refinancing tools can offer veterans peace of mind, Mercado said.
A report released this past summer by the office of Rep. Katie Porter (D-California) concluded that veterans and active military personnel were being “grossly” overcharged for VA home loans. Taken to task were NewDay USA and The Federal Savings Bank, which were alleged to “…continue to aggressively market cash-out refinancings with fees and interest rates that could cost borrowers tens of thousands of dollars more over the life of the loan compared to other lenders,” Porter said in unveiling the Aug. 3 report titled “AWOL: How watchdogs are failing to protect servicemembers from financial scams.” In response, NewDay USA claims its cash-out customers had an average FICO of 694, which was 35-75 points lower than the average FICO of other top lenders and that its average cash-out refinance loan to value ratio (LTV) was also 90.5%, which was "significantly higher" than what was offered by other top lenders.
Read more about FHA cash-out refinance: how does it work?
Cashouts abound at ClearPath as well, but with an eye toward affordability, Mercado suggested.
“I’m grateful that we’ve been able to serve the refinancing and cashout needs of our valued customers using the homes so many of them will be spending their holidays this year with their families,” Mercado, a US Marine Corps veteran, said. “We look forward to helping even more borrowers next year, especially veterans, active duty servicemembers and their families, who have sacrificed so much for their country,” he added during a telephone conversation mere days from the 80th remembrance of Pearl Harbor Day when 2,403 servicemembers and civilians were killed in a Japanese attack.
A military veteran himself, Mercado hinted at an empathy informing his decisions that has helped propel the lender to the 50,000-transaction mark. “I’m also proud to have helped many other American families utilize FHA mortgage to achieve the American Dream.”
