|
Frequently Asked Questions
Q: What is your minimum net worth requirement?
A: > $250K cash.
Q: How long does it take to get approved?
A: As of Q1, 2010 - Complete applications are going to Committee within three weeks. |
Q: What product restrictions have been enacted since the mortgage market turmoil of 2007?
A: Southwest Securities, FSB has consistently supported most mortgage products as long as the originator could obtain a valid takeout from a reliable permanent investor. We have never funded Hard Money loans and certain Sub-Prime products require special sublimit approval from Loan Committee.
Q: What is the maximum allowed time in the facility?
A: 60 days maximum - Bank may permit longer dwell times under certain circumstances, but higher rates would apply.
Q: What are your rates?
A: Pricing is subject to credit strength, potential volume, and competitive factors. Southwest Securities, FSB has never considered itself to be a "price leader" because we believe our service has significant value. Pricing can be indexed to Wall Street Prime or 30 Day LIBOR. Originators who are concerned about loans funding on time with minimal hassles will not regret engaging this institution.
Q: What are the benefits of transitioning from mortgage broker to mortgage banker?
A: Most originators who have successfully converted say that the best reason to do so is to take control of the entire funding process. Of course, they say it's nice to be exempt from disclosing yield spread premiums and they like the potential for better price execution. But those who want to make a promise to a Realtor or Borrower in the field prefer relying on their own staff to back up that promise instead of hoping that their wholesale comes through this time.
Q: What are the risks of becoming a mortgage banker?
A: With privilege comes responsibility. The originator takes temporary credit risk on the loan and is expected to have the systems and processes in place to successfully deliver that loan to the Secondary Market. The Warehouse Lender will expect to be paid back in a timely manner whether or not the loan is successfully sold.
Q: Can you fund loans across the country?
A: Originators are expected to be properly licensed before funding loans in a different state. As to geographical restrictions, we fund loans on properties in all states except New York and Dade/Broward Counties, Florida.
Q: What is your application fee?
A: $1,500 prior to underwriting. $750 is refunded after ten loans are successfully funded. If the application is denied, unused portion of the application fee may be refunded.
Q: Is there a personal guaranty requirement?
A: Yes, a performance guaranty is required for owners of 25% or more of the company. Personal trusts are also typically asked to guaranty. In cases where there are no owners of 25% or more, guaranties of at least a majority of ownership may be negotiated.
Q: How do you look at startups?
A: Most startups appear to be existing divisions that are spinning away from a parent company. These are usually considered acceptable because there is a team of professionals who have been working together previously. "True" startups are difficult to approve unless they are backed by significant cash and industry experience. Applicants will be required to provide pro-forma forecasts.
Q: Do you work with Escrow Companies or attorneys for disbursement?
A: Southwest Securities, FSB generally requires that proceeds be sent directly to Title Companies covered by Closing Protection Letters. Attorneys may be required to show proof of approval by Title Insurer. If settlement is taking place at an escrow company, a Sub-Escrow must be established at the Title Company.
Q: My Company has losses year-to-date. Can I still be approved?
A: Southwest Securities, FSB will give strong consideration to losses as a percentage of remaining net worth. If the "burn rate" is excessive, approval may not be possible. Applicants will be asked to provide detailed explanations of circumstances leading to losses and action plan for returning to profitability. Pro-forma forecasts are helpful. It is also important to clarify losses that are non-recurring versus operational. Companies with losses will also be subject to monthly financial reporting until routinely profitable.