News

Overall assets, not income per month/year, central to qualification

By Sam Richards

Staff writer

Tuesday, June 3 (10:00 a.m.): With federal entities Fannie Mae and Freddie Mac still not guaranteeing “non-qualified” mortgage loans for Rossmoor homes because Rossmoor Walnut Creek (RWC) has obtained only about half the insurance needed to cover all its physical assets, certain workarounds are being developed.

Some financial service providers, using non-standard methods, are approving select Rossmoor co-op and condo financing agreements that Fannie and Freddie won’t.

One such provider is Acurus Home Loans, a Cameron Park-based home loan firm. Acurus President Paul Sterling has received what he calls a “fair response” from prospective buyers to a different kind of mortgage loan that he and others hope will help restore the flow of mortgages for Rossmoor home purchases.

The key difference between a typical “qualified” mortgage loan and the kind of loan offered by the lender Acurus is working with here, Sterling said, is how a borrower’s financial strength is measured. While most standard “qualified” mortgage loans place primary importance on a borrower’s monthly or annual income, these Acurus “non-qualified” loans are different.

“The loans I’m seeing done are based on assets, rather than on income,” Sterling said.

That is a considerable difference, he said, because some individuals or couples who have amassed considerable wealth over the years may no longer have enough current income to satisfy the requirements of a typical mortgage loan. The lender he’s working with, Sterling said, handles both co-ops and condos exactly the same way in regard to qualifying a borrower.

Recent home sales in Rossmoor have been mostly all-cash, with Fannie Mae and Freddie Mac unwilling to guarantee “non-qualified” loans because all of Rossmoor’s $2.7 billion worth of buildings and other assets are not fully insured. But lenders willing to make non-qualified loans have been appearing gradually; in December 2024, the News published a story about Kenyon Cantino, a sales manager for Loan Depot in Southern California, who was working with a New York-based investor to finance California co-op loans.

Linda Register, a RE/MAX real estate agent who lives in Rossmoor, said the non-qualified loans obtainable through Acurus are welcome on multiple fronts. Some buyers, including singles with relatively low incomes, she said, could get over the threshold into Rossmoor home ownership with such a mortgage.

“I like the idea that (buyers) have options now,” Register said.

Any mortgage with less stringent income requirements also helps buyers from regions such as the Midwest or South to get into a pricier market like the East Bay, perhaps to be nearer adult children or other family.

“It gives people at the lower end of the income scale a better chance to live in the Bay Area,” Register said.

Though she has thus far worked with only one buyer who has obtained a non-qualified mortgage through Acurus, Register said perhaps 20 others have expressed interest. Sterling said the fact that interest rates are 1 to 1½ points higher than with a Fannie Mae or Freddie Mac qualified loan probably gives some prospective homebuyers pause.

Rossmoor leaders support making home sales in Rossmoor easier, in part because sales transactions replenish the RWC capital fund. That fund pays for Rossmoor’s major capital projects through a one-time Membership Transfer Fee paid by first-time Rossmoor homebuyers. That fee is currently $13,500.

Adrian Byram, a former member of RWC’s Finance Committee and now the RWC Board treasurer, said he supports seeing mortgage options that don’t rely on Freddie Mac or Fannie Mae, in part because those entities have been guaranteeing fewer mortgages in recent years. “That means they’re not fulfilling their role” of backing mortgages, he said.

Although Rossmoor home sales January through April (159) are up slightly from the first four months of 2024 (140), further stimulation is welcome, Byram said, and non-qualified mortgages are one way to help do it.