Loan Officer Training - 12/19/2024 - Mastering Foreign National Borrower Loans

In this episode of Loan Officer Training, we explore the ins and outs of Foreign National Borrower Loans—a unique lending solution for clients without U.S. residency or credit history. Learn how to identify eligible borrowers, navigate documentation requirements, and structure loans that meet their needs.

We’ll share expert strategies, key considerations, and actionable tips to help you confidently serve this niche market and grow your business. Tune in and take your skills to the next level as you master the art of working with foreign national borrowers! 🌎✨

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The Mortgage Calculator is a licensed Mortgage Lender (NMLS #2377459) that specializes in using technology to enable borrowers to access Conventional, FHA, VA, and USDA Programs, as well as over 5,000 Non-QM mortgage loan programs using alternative income documentation! 

Using The Mortgage Calculator proprietary technology, borrowers can instantly price and quote thousands of mortgage loan programs in just a few clicks. The Mortgage Calculator technology also enables borrowers to instantly complete a full loan application and upload documents to our AI powered software to get qualified in just minutes!

Our team of over 350 licensed Mortgage Loan Originators can assist our customers with Conventional, FHA, VA and USDA mortgages as well as access thousands of mortgage programs using Alternative Income Documentation such as Bank Statement Mortgages, P&L Mortgages, Asset Based Mortgage Programs, No Ratio CDFI Loan Programs, DSCR Investor Mortgages, Commercial Mortgages, Fix and Flip Mortgages and thousands more!

Our Mortgage Loan Originators are trained to be loan consultants to guide borrowers throughout the entire loan process. A licensed Loan Officer is only a phone call or zoom meeting away and always available to

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Catch all the episodes of the Loan Officer Training Podcast at https://themortgagecalculator.com/Page/Loan-Officer-Training-Series-Podcast

Loan Officers for Unlimited Free Non-QM Leads & Trainings Join The Mortgage Calculator at https://themortgagecalculator.com/join

The Mortgage Calculator is a licensed Mortgage Lender (NMLS #2377459) that specializes in using technology to enable borrowers to access Conventional, FHA, VA, and USDA Programs, as well as thousands of Non-QM mortgage loan program variations using alternative income documentation!

Using The Mortgage Calculator proprietary technology, borrowers can instantly price and quote thousands of mortgage loan programs in just a few clicks. The Mortgage Calculator technology also enables borrowers to instantly complete a full loan application and upload documents to our AI powered software to get qualified in just minutes!

Our team of licensed Mortgage Loan Originators can assist our customers with Conventional, FHA, VA and USDA mortgages as well as acc...

Transcript

Restream recording Dec 19, 2024 • 05:02:15 PM: 0:14

Okay. So I was just touching base on that right now. What exactly is a foreign national borrower? A foreign national. A foreign national is a citizen of another country who derives their income and permanently resides in a country. outside the United States. Now, since we do have so many loan options at the mortgage calculator, we do have an exception that's possible when we have a dual citizen, right? Citizen of the United States and citizen of another country who lives permanently outside the United States and basically has created their whole life outside the United States. Um, good example for this could be someone who was born. In the U S so they have their us based citizenship physically born here, but they've lived their whole life in another country. And they're also a citizen of that country. That's where they work. That's where they have their business. That's where they have their credit. That's where they have their assets. That would be a foreign national. And we do have an option for dual citizens that, uh, basically that are foreign nationals. Uh, now please do note, uh, there is not a credit score requirement, nor is U. S. based credit required for foreign national borrowers. Uh, we, when we, you're pricing these out through the pricing engine, uh, please do be aware that you have to input a certain credit score For the different conduits that we have, right? So you're either going to put in a 500 as the credit score to get options from, let's say investor a, B or C, and then you would put a six 80 credit score to get options from most of the other investors that offer for national loans. Um, that is simply a hack, uh, that has been set up. By the different, uh, investors that we have available, uh, that we can offer the foreign national products, uh, to, because, you know, they don't typically do not have a credit score, right? So some. Say put 500 to get their options. Others say put 680 to get their options. See what different options you get, check the guidelines, and then see which is the best one for your borrower. Now, please do note if the foreign national borrower does have a credit score, then you need to abide by the minimum credit score and trade line requirements for the program guidelines, which that will apply, right? So. They don't have a credit. No minimum credit is required. But if they do have a credit score, then you have to look at the minimum credit score requirements and make sure that the borrower meets those minimums. Now, please do know, um, we do have foreign national borrowers that are from visa waiver countries, as well as foreign national borrowers that are from non visa waiver countries. What exactly does that mean? And how does that affect your borrower? And how does that affect the loan and you, right? Well, it has a lot to do with it. A visa waiver country. is a country where a, uh, foreign national does not need a visa, a valid, unexpired visa. They do not need it to enter the United States. Uh, the most common example for this would be, uh, foreign national borrowers that are citizens and hold a European Union passport, for example. Those are visa waiver countries typically. And borrowers, for example, that hold a Canadian passport. That's another visa waiver country. These borrowers do not need a valid unexpired visa stamped on their passport to gain, you know, to be able to enter the U S. Which means that they would not have to provide that in order to be able to qualify for the loan. Now, we do have options that don't require them to have a visa. If it's an investment property and they're not going to sign here in the United States, then, um, you're not going to have the requirement. But for example, borrower from, let's say most South American, Central American country, let's say Colombia. Right. That's one of the most popular segments now for national buyers, borrowers looking to purchase and will need financing in the U. S., but they need a visa. They don't have a visa, they can't come, they can't enter the U. S. Most want to view the properties or at least if they need to come sign in person, they're going to need that visa. And most options will require, if you're going to have an in person signing, or if it's being brought as a second home, they're going to require a visa for a non visa waiver country individual. So do be aware of that when you're interviewing your foreign national borrowers, you're going to ask where they're from, you're going to see if that's a visa waiver or non visa waiver country, you're going to ask them if they have a passport that's valid, and you're going to ask them if they have. a visa if they are from a non visa waiver country. Don't ask them if they have a visa if they are from like Canada or European Union. So make sure you do your research. Don't put the borrower on a wild goose chase. Uh, you always gotta, you know, show your knowledge. Now do be aware that, uh, not all visa types are acceptable. So do check the guidelines for the option that you're choosing. Reconcile that with the visa type that your borrower has if they are required to have a visa and make sure that it's an acceptable visa type. For example, one visa type that is not acceptable is the diplomatic immunity visa. Reason being you can't sue any borrower that has a diplomatic immunity visa. So how would a bank sue them for to collect right for foreclosure proceedings? Um, And like I was stating, we do have an option for expired visa for a borrower that's from a non visa waiver country where they have an expired visa. If it's an investment property loan, um, When the borrower is not signing in the U. S. invest in property because of its second home. At some point, they got to visit the country to live here and conform with the requirements of the mortgage that says second home. You got to occupy the property X number of days or weeks or months, depending on the guidelines per year. So they definitely need a visa for that option. But they may not need a visa for investment property if they're not going to sign here in the U. S. if we take it through what I call our streamlined option to cover shortly. So keep that in mind because that's a definite, uh, hold back for some people that don't mind viewing the property by video with their realtor, right? Do a virtual showing, uh, but maybe we're not offered the option to close on the loan. Without having a valid visa. We do have that option here at the mortgage calculator. So what are the eligible transactions for a foreign national? Well, We have our full doc option, right? And I'll cover what full doc means in a, in the next slide, but we have our full doc option, which can be either as a second home. Now, remember second homes have no pre payment penalties. So you're probably going to have a little bit higher interest rate on second home loans than you would on an investment property, which could have. You know, 1, 2, 3, 4, 5 year prepayment penalty, which is going to help the rate and the investment option would also be the one for the, uh, no visa situation. And full doc, we also have a streamlined option, right? We have a streamlined option for full doc and a streamlined option for DSCR. What exactly do I mean by a streamlined option? Well, I'm talking about when it's full doc, an option that does not require credit reference letters from the borrower. So you want minimal documentation. Borrower says, Hey, I'm not going to be able to get those letters anytime soon. You know, um, then we do have the streamlined option that will not require credit verification letters for full doc. And we also have the streamlined option for DSCR, which is our other eligible transaction type. Uh, the streamlined DSCR option is not going to ask for a CPA verification letter, uh, this CPA verification letter would not be when they ask for it. It is not for income purposes, but to verify housing expense in their country of origin, if they have a housing expense, if they have a mortgage, you know what the taxes may be, those kinds of, uh, those kinds of, um, Verifications are required in most cases. Not required in our streamlined option and in our streamlined DSCR option. Not only will we not ask for a CPA verification letter for housing, uh, but we will not ask for a credit reference letter. Also, so we could do this one through our no visa required option. Then we do have a quote unquote, and I guess we call it a non streamline option for the DSCR, which is, again, DSCR qualifies you on the rental income generated by the public. For the property, but in this case, the non streamline option will require a CPA letter to verify the housing situation in their country of origin, and there will be a visa requirement kind of have to have active visa on their unexpired passport. So unexpired visa on their unexpired passport. So. Uh, now as far as, uh, verification of income for the full doc, I'm going to get that in the next page when I show you the sample letters. But remember DSCR, you're not going to use any personal income from the borrower. And one of the things to know on the full doc investment property loans, keep in mind that in many cases, the guidelines will not allow any income to be used from the subject property. Typically on those full doc investment loans for foreign nationals, you're qualifying them on their income in their country. And again, that full doc could be an employee or it could be self employed employee, you're going to get a verification letter from their employer, similar to a verification of employment, but it's going to be a sample letter with an um, you know, like a. Just a letter, which I'm going to show you shortly, or if it's, uh, if they're self employed, the full doc is going to be a letter from their accountant. Could be a CPA, tax preparer, uh, you know, or accountant, but, you know, but in their country, uh, they're going to have to have a license, right? So we'll need some kind of a license verification document, uh, for, for the accountant, as well as the verification letter for income when they're self employed. Again. An employee is going to be a verification letter from the employer. So let's get into the closing, right? We'll talk about the sample letters next, but let's talk about the closing because in a foreign national loan, this is just as important as do they qualify as how are they going to sign? How are they going to close? Remember they're In some cases, thousands and thousands and different time zones away. They need to make sure they can get a, if they're going to come to the U. S., they can get a plane fare or they have to set the appointment. So, uh, at the embassy or consulate. So the closing should be planned at the onset of the loan application. When you're talking about. Do you qualify? You're also going to ask, are you going to come to the United States to sign in person? Do you already have a visa? If you're going to come here, if they happen to be from a non visa waiver country, um, are you going to sign in your country of origin where you live? Because then they, they need to make appointments. So you want to, Plan this at the onset of the loan application, but at least two weeks before the closing is to occur, right? Give yourself time. So how, what are the different ways I'll break it down a little bit more detailed here. What are the different ways that a foreign national borrower. Can sign. Well, the easiest, most common way is the signing can be in person in the United States. Right? So with that being said, you know, we're going to have to have a lot of communication going on between you and the borrower, including the clear to close and all that kind of stuff. You need to give them a lot of advanced warnings so they can get that ticket, a plane ticket, and they can be here for the, a lot of time that they need to be here. To be able to do their walkthrough inspection, hopefully of the property and then to be able to sign. So, you know, we sometimes get delays. It's hard to, it's hard to meet the mark exactly on that day. So we do want to make sure that the communication channel is open. Two way communication and that we set the expectations properly and we update the borrower, uh, as soon as possible with any changes in case they need to make some changes to airfare, air flight, you know, all that kind of good stuff. Because sometimes it's tough to get those tickets. And making changes could cost them thousands of dollars in the cost of the airfare or possibly losing non refundable tickets and having to purchase new ones. And then you're going to have a very irate borrower that's going to be asking you possibly for reimbursement of the extra fees. So please do communicate very well with them, uh, especially if it's, you know, for any of these reasons, right? So first option, the in person, remember visa will be required if the borrower resides in non visa waiver country. So you don't want it at the last minute. That to become an issue. Like my visa is expiring next week. So I got to close today and I got to leave today. So very important. The next way that they can sign is. at a U. S. consulate or U. S. embassy outside the U. S. A., right? This, again, another logistical situation where good communication needs to be, uh, in, you know, in order because the borrower needs to make an appoint, the appointment in advance at this consulate or embassy, and sometimes it needs to be months In advance, right? Months. You can't say like, Oh, we're closing next week. Okay. Let me make the appointment. Then all of a sudden they, they'll tell you, no, I'm sorry. They, the appointment is not for three weeks and I got to fly 800 miles. To the Capitol, which is the only place where they may have a U. S. embassy or consulate in a foreign country. So do be aware of the importance again, communication, setting expectations because they need to make an appointment. So they may want to make that appointment and then let you know when it is. And now you've got to set target that if you don't meet, you got to let them know like two weeks before, Hey, you know, we've had a delay in the appraisal. I don't think we're going to meet that day. I think you should reset the appointment for a week later. Can't let him know that two, three, four days before he's going to close. Hey, we got a, we got a three day delay because of whatever this is. This is probably the toughest part of the foreign national loans is the logistics to pin down the closing date and the borrower being available to sign on that date. Now, another solution, uh, which is a little bit more difficult for foreign nationals because Just due to the nature of their being a foreign, they being a foreign national, they do not have us based credit. I mean, excuse me, us based identification. So it becomes difficult to do remote online notarization because remote online notarization relies heavily on being able to verify the borrower's identification through third party systems, right? And in remote, online notarization. We have the remote notary in one location. We have the borrower signing in another location and the borrower is basically sharing their information with the remote notary who say, yeah, that's you. And they're going to be giving certain notarized documents, verifying the validity of the signature of the borrower on those documents. So it's, it's a, it's a, it's a process. Not always approved. So you need to make sure that if you plan to use remote online notarization, coordinate that at the onset of the application, as soon as possible to confirm the details. You want to make sure that the investor or lender funding, the loan, the investor, we're selling the loan to, or if you're going wholesale, the lender that's funding the loan, you need to make sure that they approve and accept it. Remote online notarization. So whoever you're using for the remote online notarization needs to be submitted for their approval. And then most importantly, the title company needs to approve the remote online notarization process because many title company underwriters, for the reason that it's hard to do third party verification of the identification of a foreign national. Most title company underwriters will not. Approve and accept remote online notarization. So you may think you're cool. You're great because, Hey, it's awesome. And, uh, we're going to close, uh, because I found, uh, uh, a remote online notary and the investor accepts it, but then you forget to check with the title company. And then when title says, okay, I mean, uh, how are these docs signed? And maybe you didn't even tell the title company. They sent the docs to the bar thinking they were going to sign somewhere that was approved. You know, like at a consulate or embassy and all of a sudden they get a package back signed by Iran, remote online notary, or approved by remote online notary, and they're like, wait a minute, we didn't approve this. This is an invalid closing. This has to be done all over again, and you know, that's a logistical nightmare. You know, which could delay your deal a week or two weeks, so imagine going to the seller and saying, we really didn't close, we need a week or two weeks more. That's going to be a predicament. And the last option that could be used for signing is the, is, uh, apostille notarization, right? Apostille is a certificate that certifies the signature of a public official on a document for use in another country. So borrower could go to the public official. Cool. In the foreign country. And if that public official can produce an APA steel to certify the signature and all those documents, it's actually being the borrower. And if the APA steel quote unquote, notarization is accepted by the title company and is accepted by the investor or the lender, then you could use it. But notice what I'm, what I'm mentioning is that they have to approve the process just like they have to approve the remote online notarization. process. So definitely in person or consulate embassy is the preferred route. We do have the other two routes as potential options, but the main point is, uh, make sure that you coordinate this at the very beginning of the transaction. And, uh, Oh, I got my clear to close. Let's get everybody ready to close. You're setting appointments and you haven't realized the logistical situation of trying to get a foreign national borrower to close. And now you're in a pickle trying to figure out how you're going to close this deal and fund it. Oh, and on top of that, I didn't mention, right. Your rate lock's going to expire in three days. You're used to, yeah, they're going to sign tomorrow. I have my package tomorrow, the day after. Nope. If that package got emailed or not emailed, got sent to that borrower and they're in France and they're signing in France, that package now needs to get couriered, you know, we're going to ask them to scan it obviously and email it for review, the signature docs at least so that title company could say, yep, you signed everything properly. Now you can send us the package or they may say, Hey, you missed this and this and this, you got to go back because you missed something. So now they got to go back and do the appointment again and all that kind of stuff. And then once everything is properly signed and confirms probably signed, then they're going to send back by curve. We are usually DHL, which is a popular one for overseas. They're going to send back the package by DHL and it's not overnight. Even though they may say overnight, it's going to be like three days for it to get to the title company bar. I need to go drop it off. Who knows what time to drop it off. So, then it needs to get here to the US. Then, it needs to get distributed by from the airport eventually to where it's going to go to the title company and then once the title company has it, then they upload the package to the portal of the investor and now possibly, you know, the clock stops ticking on that rate lock So, I could be a week or more just trying to get that whole thing finalized. Get that closing finalized and your rate lock has to be good throughout that whole time. So a lot of moving pieces to the foreign national borrower that has nothing to do with their credit or income or appraisal or title has to do with just closing the deal because of the logistics involved in all of these different components of the transaction. So plan the closing. So last but not least, let's look at some of the documents that we're going to need, right? I'm sharing with you here a sample income letter for a self employed borrower right now. This was from one of our investors that has good for national resources. They give a sample letters that we can provide. Um, to the accountant where they can then put it on their letterhead and add anything else that they feel, but it's basically fill in the blank with the main information that we need, right? The date, borrower's name, passport number, the company that they own, since when they owned it, their percentage of ownership in the company, what the main business of the company is, if they have a website. And the income for the borrower for the last two years, the 2022, for example, is two years prior, 2023, one year prior in the year to date income for 2024. And then they provide that on their letterhead. We get their CPA or their accountant license information. Hopefully they can actually provide a certificate because it's pretty tough for us to verify a foreign national license. So if they give us a business license already, that's, that's the best. And then most importantly, if the document is not in English, which we prefer them to come into English to expedite, then it needs to be translated. Uh, to English by a certified translator. You can't just get it yourself because you know English and Spanish and translate it has to be a certified translator. That's going to put your seal on it, verifying the authenticity of the translation, very important because all docs need to be in English. So this is our sample letter. When the borrower is self employed, I guess our sample CPA letter, then here's our sample letter for an employee. Very similar to the CPA letter, but this is for an employee, right? Hourly salary. We don't need tax returns through the, uh, you know, most of our options for these self employed borrowers. We just need this letter. We don't even really need pay stubs. We just need this letter. So very simple to whom I may concern. To inform that borrower X with ID number Y has been employed with company Z since, and there's a higher date, what their position is, their 2022 income, 2023 income, what their monthly salary or monthly income is. And their year to date income and the, and if the probabilities, uh, the probability of continued employment is good, right? Like John Smith, his probability of continued employment is very good. He, she valued employee sincerely, same thing, uh, needs, and this is for, from an employer outside the U S remember no inside the U S income can be used, needs to be on company letterhead and translated to English, even any other language. And then last but not least. They like to call it a bank reference letter, but this can actually be used as a credit reference letter. Now, do remember the following. If we're going with one of our streamlined Apple doc or DSCR or, or, or, or, you know, full doc investment, uh, which is also available streamline this, uh, you know, we don't need any credit reference. So this letter would not be applicable. Very simple, letter conforms that the borrower with a passport number, uh, XYZ has been banking with the bank name since what date, their name, the checking account number, what the balance is, and that, you know, they have fulfilled all the obligations and that they value the business relationship that they have with them. Very basic fill in the blank kind of stuff again. This is used for credit references, needs to be in English or translated to English by a certified translator, needs to be on their letterhead reflecting their phone number address. And again, as a reminder, this won't be needed if you're using one of our streamlined options. All right. So covered a lot of, uh, information here with you today and wanted to know any questions, uh, for nationals, great loan, very fast growing segment of the market, along with it and, and obviously DSCR and bank statement loans. So it has to be, you know, I'm going to give it a minute to see if I have some questions, I know it's pretty thorough here, but, uh, any questions you have on income, on visas, credit. Anything like that. This is your moment. I know that I see a lot of times everyone, when they're, you know, running the quotes for the four nationals, they're automatically putting in like 700 as the score. And all I can stress, I can't stress it, uh, is know that what score you put in there is going to affect the options that you get. So do, uh, if you have any doubt, reach out. And, and we'll confirm to you for the different investors what's the score you have to put, but we do have that guidance also in the Knowledge Center where we let you know for X, Y, Z, uh, for national option, you have to put at least either a 500 or a 680 or a 700 or the program minimum as the credit score to get foreign national options. Alright, I don't see any questions. Give it another minute and now we'll be done for today. Uh, just letting you all know that starting next week, we're only going to be having this particular training on Thursdays. Same time, 12 noon, but we are not going to have it on Tuesday, Wednesday, and Thursdays anymore. We're just going to have this training on Thursdays because we're going to have some additional, uh, team wide training. Now on Fridays, which is going to be awesome. So, uh, looking forward to that starting next Friday. All right. So no questions. I hope that's because I did such a great job and not because I put you out of sleep. Uh, looking forward to seeing you all next Thursday and seeing you all on next Friday. So have a good day.