Excelerate Capital: Excel-erating the positive
See this article in BOSS Magazine
When Michael Thompson and Thomas Yoon set out to create a best-in-class customer experience for underserved mortgage borrowers and a work environment designed to attract and nurture the best talent in the industry, the world was very different.
In the 2010s, as the financial world began to recover from the Great Recession, options for non-traditional borrowers looking to finance the purchase of a home or property were slim to none.
After the subprime mortgage crisis, mortgages that met the stipulations of the applicable regulatory agency (like the FHA, for example) were seen as the only loans worth pursuing.
Conventional mortgages tied to agency documentation and strict qualifying standards, known as agency loans, were the only option. Borrowers with special circumstances, such as owning their own business, being a real estate investor, or being a retiree, have been left behind.
With half a century of expertise between them, Thompson and Yoon saw a ray of sunshine in this freeze: unqualified (non-QM) mortgages. When Excelerate Capital was founded in 2014, there were many borrowers with strong repayment histories who did not meet agency loan requirements – and there was no way to serve them. QM loans were not only the key to a new flow of borrowers, they were a missing piece of infrastructure that could go a long way in stabilizing the mortgage industry.
“Generally, non-QM loans are the opposite of the subprime loans of yesteryear,” Yoon said. The non-QMs largely cater to the self-employed, many of whom are high net worth borrowers with significant cash flow that their tax deductions can obscure. “Their true income is not properly disclosed on the tax return; they have tons of cash and cash, but their tax return doesn’t say so, and they can only qualify for funding if they make a substantial down payment. The non-QM fills this void.
Unlike agency loans, non-QM loans are more convenient and collaborative. Agency loans are taken out with an automated underwriting engine and the resulting conditions are verified by the underwriter. Automation speeds up the process but can have limitations that exclude non-traditional borrowers. A more manual process allows underwriters to make practical decisions taking into account extenuating circumstances. “If we know someone’s been going through a financially tough time but that doesn’t reflect their true credit rating and true ability to pay off their debt, we find ways to make the deal work with respect. guidelines, ”Yoon said.
If you’re tempted to equate non-QM loans with the subprime loans of yesteryear, consider these differentiators: The actual average FICO score for a non-QM borrower is north of 700. The average down payment is over 25 %, and the loan amount in some areas exceeds $ 700,000, which means the borrower is buying property worth more than $ 1 million.
Non-QM represents a small sector of global mortgage finance in terms of scale, but it is also the hottest segment in the industry. “We have a variety of programs for first-time homebuyers, for low income borrowers, for the middle class but very underserved in the self-employed arena – this is where the non-QM really starts to go. grow, ”Yoon said. “He’s a real disruptor.
One particularly disruptive aspect for Excelerate was their approach to stated income loans. Their stated investment program, launched in 2016, requires borrowers to have high equity, a substantial down payment, eligible FICO scores, and reserves, but the lender does not need to consider their income. In the case of purchasing a rental property, for example, the projected rent of the property would be factored into the decision. “This is one of the core programs in non-QMs, however; we were one of the first to do it, ”Yoon said.
Today, Excelerate Capital is a full-service mortgage banker and industry leader in non-QM lending. They also provide a full range of compliant agency loans including FHA, VA, Fannie Mae, and Freddie Mac programs. All credit decisions are made in-house and, according to their website, “As a direct Wall Street lender, our guidelines are tailored to the modern borrower and all the scenarios they involve.”
As Yoon said, “We are disrupting because we are one of the early adopters and we are innovating in the field. This is our calling card: we innovate in the sector and help to create trends. The fintech in our industry is really lagging behind, just because we were the ones who created the crash… we were treated like the plague for many years, so we are lagging behind other industries. But the fintech movement is real, and it’s happening in real time.
Excelerate is at the forefront, creating a proprietary subscription engine specifically for non-QMs that aims to create a great customer experience, similar to popular agency platforms. “We are perhaps the only company doing this in our industry,” he added. “Because we were one of the first to adopt, our relationship with Wall Street is well connected. “
The guidelines for non-QM loans are increasingly dynamic as they must be able to meet the needs of a rapidly changing lending environment. While agency lending guidelines may change multiple times over five years, non-QM guidelines may change quarterly. “We are constantly iterating to meet the needs of the market,” he said. “Innovation in loan programming only happens in the non-QM sector. By definition, if you are in the non-QM, you are constantly innovating.
This constant pace of innovation transcends the creation of new products and systems to create a corporate culture that employees seek. “As a startup, we didn’t have the capital of an established mortgage platform, so it was very important for me to create a corporate culture. I spent a lot of time cultivating a good culture within the company, ”said Yoon. “The only way to retain talent was to give people a place they really enjoyed working. “
Changing the temperature of the old-fashioned hyper-competitive work environment was another primary focus. “In very good mortgage companies there is a healthy mix of synergies between sales and operations. I take pride in our leaders interacting with each other, from different silos and departments, in order to humanize the relationship. “
The strategy is working. Since the company was founded in 2014-19, only two people have left the company. “Our retention rate was astronomical. Now with 400 employees it’s not the same percentage in terms of percentage, but compared to the rest of the industry we are definitely an outlier. This is Excelerate’s comfort zone, widening the horizon with every step forward.
We have one goal and one goal: to provide a world-class mortgage experience. To achieve this noble goal, we are committed to providing:
- Wide range of loan products
- Flexible and sensible underwriting guidelines
- Competitive prices
- Excellent customer service
Excelerate Capital is a registered DBA of Castle Mortgage Corporation; NMLS # 61382; Equal housing lender.
For more information on licensing, please visit ExcelerateCapital.com/licensing. 4000 MacArthur Blvd, Suite 300, Newport Beach, CA 92660
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