In A Pinch There Are Alternatives

GRAND RAPIDS — For people who are self-employed, have erratic income streams, or are starting up a business, income verification can pose a problem when they try to secure a loan. But borrowers who don’t have the traditional documentation needed to apply for a loan or who don’t want to supply the documentation do have alternatives.

One such alternative is the ChaseFlex mortgage program at Chase that provides mortgage loans for primary residences, second homes or residential investment properties. One of the benefits of the program is that it offers more flexible underwriting requirements for the borrower. For instance, under the ChaseFlex program a borrower could verify employment via a W-2 or pay stubs instead of contacting the employer directly, or provide his own bank statements rather than getting them directly from his bank, according to Chase spokeswomen Mary Kay Bean.

Dan Cavanaugh, Chase’s West Michigan home loan manager, said the ChaseFlex mortgage program was created to offer borrowers more choices. The program has been around for several years, though it has been expanded in the past year.

He said ChaseFlex was designed for self-employed people, entrepreneurs, people who earn a large part of their income through sales commissions, people who have only seasonal income, independent contractors, entertainers, sports figures, doctors and lawyers or other professionals who might prefer not to provide complete tax returns.

A ChaseFlex mortgage can be processed faster if a borrower needs to close on the loan quickly, so the convenience and speed is attractive to many borrowers, Bean noted.

“This could be a good alternative for, say, people who are moving and their financial information is boxed away, but they need to get the mortgage done quickly,” Cavanaugh added. “It would also be a good alternative for people who maybe started a business recently and don’t have the traditional couple years’ worth of tax returns to show, but their credit has always been good.”

Chase bases a ChaseFlex mortgage on the borrower’s credit history and the appraisal on the property. The program offers fixed- and adjustable-rate mortgages with interest-only options.

“This is not for someone who doesn’t have credit or has bad credit; it’s for regular ‘A’ borrowers,” Cavanaugh explained. “It’s just allows alternative ways to document the loan.”

John Isler of Grand Rapids had already made a decision on how he was going to buy a home when his accountant informed him that he could save a tremendous amount in taxes by defraying costs over two years rather than one year.

“The trouble is, he told me this when I was very close to closing, so I was unable to go through all the paperwork to get a standard-type mortgage,” Isler recalled. “The process was really fast and that’s why this really appealed to me. I might have saved a quarter-point by going with a standard mortgage, but because of my time scheduling and everything, I needed something that would go through very fast. It took less than two weeks. If you’ve got a good credit rating, this can save a lot of time.”

The reason a ChaseFlex mortgage was appealing to Janet Keck was because she didn’t have to supply a lot of documentation.

“I had gone to other banks and they wanted a whole lot of paperwork,” Keck said. “It was just so much easier to go with the ChaseFlex and have it done in a week. It all went very quickly.”

Rates on ChaseFlex mortgages may be slightly higher than other mortgage products.

“There will be some differences depending on what documentation level and loan-to- value the customer chooses,” Cavanaugh pointed out. “Less documentation would typically be a little higher rate. But this shouldn’t be confused with a subprime type of loan, because it’s not. There are no pre-payment penalties and no higher up-front fees; it’s just that the rate is going to be a little bit different.”    

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