Non-QM Loans for Self-Employed & Investors | Brian Fox Breaks It Down

Quentin (00:04.031)
Hey everyone, welcome to the Investor Fuel Podcast. I am your host, Quentin Edmonds. But as you know, I just go by Q Edmonds. And today I am joined by someone that I have been looking forward to chatting to. Chatted a little bit, you know, to just get things going a little bit. But I know that you guys are really, as I say all the time, I’m going to join this podcast. I know you guys, you come back, so I know you enjoying the podcast. And this person,

is a wealth of knowledge, especially talking about the non QM wholesale. So I am so excited to introduce you guys to my friend, Mr. Brian Fox. How you feeling today, sir?

Brian Fox (00:43.655)
I’m good, I’m good. Thanks Q. Appreciate it. How you feeling?

Quentin (00:46.171)
Absolutely, I mean, I’m doing great. Glad to have you here. I know our listeners are really going to appreciate your approach when it comes to lending, when it comes to watching out for them, when it comes to these tax laws. Like, I’m just so glad and interested to let my these viewers really get a perspective of what you do, your expertise and how you can really help. And so if you don’t mind, man, I want to dive right in and pick your brain. So.

First off, if people, you know, they may not be familiar with you, familiar with your world. So if you don’t mind, give us a short version of what’s your main focus these days. And also, Mr. Brian, tell them what market you’re operating out of also.

Brian Fox (01:15.203)
Let’s go.

Brian Fox (01:30.094)
Perfect, gotcha. I’m Brian Fox, SVP with AHL Funding. We’re a non-QM wholesale lender. for those that don’t know non-QM, right? It means non-qualified mortgages. Basic mortgages are you go to the bank, you have your W-2, your pay stub, and you turn it in and you go through Fannie, Freddie, DU, desktop underwriting, they say yes or no, right?

We’re more of a manual underwrite and we focus more on self-employed borrowers as well as investors. That’s not to say we won’t do wage earners, we do as well because a lot of times the loan amounts are outside the county limit. So we do do more of the jumbo kind of paper.

in that world. But bank statement loans we love because a lot of times self-employed borrowers, they write off a lot on their taxes, right? They have expenses. So the business makes a certain amount of money. You have your expenses at the end of the year, whatever you pay yourself might show up a little bit low, right, for the house that you want to qualify for. So we’ll use 12 months of your business bank account.

and we take those deposits, we do a bank statement calculator essentially, which is we divide them by 12, we give you a little expense ratio, basically saying, depending on your business, what your expenses are, and then we give you that number, and that’s usually a lot higher than the tax return, which allows you to get into the house. So we love the bank statement loans, we love our investor loans, our DSCR, which stands for Debt Service Coverage Ratio.

which is a great loan for borrowers, investors, people that want to buy non-owner occupied properties or properties they want at Airbnb. We just simply take a look at the rents in the area and if the rent covers the mortgage payment, then it’s only 20 % down for a borrower to purchase this home and they don’t need to prove any sort of income, job. We do need some reserves, make sure they can make the payment for at least six months.

Brian Fox (03:23.506)
and we’re doing a lot of that business. So we love the bank statement loans and the DSCR loans. There’s a couple other programs we do, like profit and loss statements for self-employed borrowers. Or you might have a borrower that has a lot of money in the bank that’s just sitting there, crypto or cash or stocks, bonds, retirement accounts.

We can use simply that money and divide through a calculation and give you a monthly income that would then make you qualify for the loan or help you qualify for the loan, I should say. So yeah, it’s a non QM is a interesting space and it’s been around since 2014. We love it. We love helping borrowers because prior to 2014, all you had was a paper and then hard money loans, right? Private money. And those loans cost borrowers a lot, know, 12.

12 % interest and then they’re usually due in one to two years. Five points these people are charging. So it’s a little aggressive. So NonQM came and just slipped there in the middle and we follow the same guidelines as Fannie and Freddie, right, with the CFPB and all the Trid laws. So it’s a great business and we’re really enjoying it.

Quentin (04:28.191)
Mm-hmm.

Brian Fox (04:34.872)
So, yeah.

Quentin (04:35.525)
Absolutely, man. I love what you guys are doing. I love how you’re trying to help the self-employed. These borrowers, your flexibility when it comes to the bank statement loans, with the DSCR, like you guys are really doing great things to try to get your borrowers the loans that they need to ultimately, you know, impact their lives in a great way, impact their families, create legacy. And so I appreciate that. Listen, that’s not easy, especially in this climate. So let me ask you this.

Brian Fox (04:42.413)
Mm-hmm.

Brian Fox (04:47.416)
Yep.

Brian Fox (04:59.02)
Absolutely. Yes.

Quentin (05:05.363)
What has been the key to keeping that machine running smoothly?

Brian Fox (05:11.468)
I mean, it’s been our network of loan officers in our broker base, right? They’re out there kind of working with borrowers and they come across people that might have a challenge trying to go, let’s say Fannie or Freddie, a paper, and they’ll call us and say, the debt to income ratio is a bit too high to qualify, right? So we allow DTIs to go up to 55%, which normal Fannie Freddie is 43 % and below. So if they’re just a little bit above, we see a lot of that paper as well. And that helps.

borrowers get into a home, which is very important to us. That’s kind of the passion behind what we do is helping the American homeowners get into a home before someone like these big funds come in and buy a thousand houses and make America renters, right? So it is, every loan we fund is a win, right? On helping the American homeowner get that house, right? So it’s important to us.

Quentin (05:59.049)
Right, right?

Quentin (06:08.223)
Absolutely, nope, that registers with me and I appreciate that because you’re right, because these businesses are coming in. Yeah. As you know, as we know, yeah, it’s getting crazy. Absolutely. It’s definitely getting crazy. So now I appreciate you guys’ approach. Now we know, you know, there’s moments when things get real. So can you tell me maybe about a deal that went sideways or a time that you had to pivot fast? You you mind sharing one of those stories with us?

Brian Fox (06:14.622)
Ugh. Yeah. Crazy.

Yeah.

Brian Fox (06:36.238)
Yeah, I mean, I could go over one that came through today. mean, it looked like a great loan. Everything was great. 17 acres, right? So it was a larger parcel there, which we do. We go up to 20, sometimes 30 acres, but we don’t get too many of them. But this one came across and when we finally got to the closing, they turned in the payoff demand, right, to pay off the loan. And there was some deferred interest in there, which meant that at some point the borrower was late, right?

And usually that’s not a big deal because we would just get a loan mod agreement that said, hey, because usually what happens with Thursday Ferd is they took out a loan modification. Maybe during COVID, they were offered a loan modification like everyone else. Well, in this certain case, this poor borrower, the current servicer had taken this loan over from another servicer that is now out of business. And this current servicer never got the paperwork in regards to this loan modification.

I’m seeing how we can fix it, but we got the payment history and it kind of shook some things up. So sometimes there are little things that happen and it’s not very often. Usually we’re pretty good because what we did was we made four different programs, our platinum, our core, our legacy and our fusion. And so if it doesn’t fit one program, it usually fits one of the other three, right? In this case, on the one I’m explaining today, I’m still going to try to figure it out because it just came up and…

I got to figure out where this deferred money went and what that was for. there’s just, once in a while there’s cases like that. I would say other issues might be appraisals come in and all of a sudden there’s like, it shows a farm on there or it shows an extra room that wasn’t permitted or multiple ADUs kind of paper. We do allow up to two ADUs and to use the rents from those two ADUs, which is a niche in our industry because most people won’t.

but sometimes we come up with a little bit more. So there’s a couple of things that could get in the way. I just to think out loud, I would say, if the income isn’t there, we obviously know that with bank statements or they have multiple bank statements and they’re kind of transferring back and forth, could get a little confusing. But the typical self-employed person that revenue comes in, we calculate those bank statements, revenue goes out, it’s pretty clean.

Quentin (09:00.319)
Yeah, yeah. Now love the creativity of the four programs that you talked about that you mentioned. I think you said Platinum Core. I got to Fusion, but I missed the third one. What was the third one? The Legacy, yeah.

Brian Fox (09:09.038)
the legacy. The legacy program was one of my first ones. That’s why I call it my legacy program because it’s one of our first set of guidelines. Really good niches in there.

Quentin (09:15.807)
Yeah.

Gotcha. Yeah. Yeah. That’s good. That’s good. creative thinking, man. And really, that’s the kind of stuff that people don’t talk about, honestly. And just that creative thinking, that’s what separates the folks from the people who dabble and the people who kind of stay in the game long term. So that’s good, man. Again, I keep saying, I love what your business is doing, So let me ask you this. What are you most focused on solving or scaling next? What’s the next real goal you see for you guys?

Brian Fox (09:34.924)
Yes, sir.

Brian Fox (09:38.798)
Yeah, thank you. Yes, sir.

Brian Fox (09:49.912)
So where we are right now, I think we’re cruising along pretty well. mean, we are bringing on more account executives, right, to get in touch with more loan officers and kind of build our base, right, of broker partners as we call them. So for me, it would be bringing on some new account executives to focus on bringing on.

more broker partners and then working to scale up our operations. We are currently at 24 to 48 hours on turn times. Adding a couple more underwriters would assist us to get to that 24 hour mark, which is my goal. So with that, then it would bring obviously volume and just get the name more out, know, get non QM, the industry as a whole out to more and more people. I feel like we have a lot of loan officers that work with realtors and whatnot, but

that message doesn’t get sent over to the realtors. So we’re trying to educate realtors more on the programs, you know, when they have a borrower that wants to purchase a home. working on that, yeah, that’s where we are now.

Quentin (10:55.865)
You know, that’s big. Like you said, trying to get more, I think you said account executives to service the broker partners. Am I framing that right? Yeah, that’s big.

Brian Fox (11:01.324)
Yes.

Yep. You are, yeah. And understanding the guidelines and really reading them and really understand it because every file that comes in has its own situation, you know? So understanding the guides, it’s real creative thinking on how you can make this fit according to what program. So it keeps you on your toes. I’ll say that, definitely. Yeah.

Quentin (11:25.875)
Yeah, yeah, no, no, absolutely, absolutely. And so that’s great, man. So you’re forward thinking, you’re creating programs that that’s going to help. Of course, you’re you’re you’re you’re you’re borrower, your customer base. And of course, we know the next move, it can either compound things or it can create chaos. Right. And that’s depending on how you play it. You know, and so I know a lot of people that, know, that’s listening, you know, they’re kind of early in their journey.

Brian Fox (11:45.314)
Yeah. Yes.

Quentin (11:53.991)
They’re looking to borrow. They’re looking to level up. They’re looking to make moves. And so I’m going to ask you this and you can answer it however way you want. But I think it would benefit people. When it comes to building relationships and growing your network, what’s made the biggest difference for you and your company, feel?

Brian Fox (11:58.285)
Yeah.

Brian Fox (12:02.733)
Yeah.

Brian Fox (12:13.272)
For us, we really started out grassroots. It’s just you get on the phones, you network with loan officers or brokers for our industry. And then we rolled out a couple CRMs and some other things that really helped us out. Data is king.

we were able to grab a hold of some data of licensed loan officers within our business that were doing some volume that we were able to get in front of. So that has helped us out. You know, we do the standard couple emails a week to all of our broker base to kind of let them know niches or programs, things we’re running into. But it’s really…

At the end of the day, with the CRMs and the emails and all this kind of contact stuff, it really comes down to relationships. So it’s really about our account executive team and them going out and speaking with loan officers and really building that relationship and building that trust, right, of them knowing the guidelines and them saying to their loan officer, look, you you’ve got a tough deal, but this is how you have to position it. And this is how we can make this work. And once that trust builds, then they just start calling on every file, you know.

So, yeah.

Quentin (13:24.265)
Yeah. No, you can’t think that relationships are everything in this space. you didn’t, when we was talking a little bit before, I know you mentioned that white, I believe that white glove approach, right? And so like you was, yeah, you know, and I think that’s, that, that kind of speaks to what you’re saying. Like there’s there’s the account executives are going out building trust, letting them know like, Hey, we got the white gloves on. You know, we, we, we’re going to make sure you’re treated well, right?

Brian Fox (13:27.758)
Yes.

Brian Fox (13:35.916)
Yeah.

Brian Fox (13:48.696)
Yes.

Absolutely. A lot of other lenders have portals and things like that where it’s just you kind of price and upload and the AE, account executive, might be a little bit obsolete, maybe there for calls to help. But we really take the approach of like from day one, from the first time the loan officer’s on with the borrower.

Like, hey, let’s talk about credit, let’s talk about their reserves, let’s really piece this together and then we really kind of walk them through the whole process and keep them up to date. So that really helps a lot. The white glove service is key for us.

Quentin (14:23.103)
Absolutely, absolutely. So listen, I mean, we are finding this. I think I’ve only kind of got two more questions. And this question, you know, I really try to give space to the person who really is the expert, right? Like you are making moves with this non-QM wholesale. You are helping the self-employed. You are creative with the bank statement loans, creative with the…

Brian Fox (14:31.182)
Yeah.

Quentin (14:52.467)
DSCR, you have the white glove service. mean, y’all doing some great things. Do you feel like there’s anything in your heart that you feel like you want to maybe educate people on or advice you want to give them, encouragement you want to give them, maybe just, know you are educators or any kind of information, like anything you feel in your heart and your mind that people may need to know right now and that you maybe you get, you know, help them out.

Brian Fox (15:19.222)
Yeah, I mean, from a borrower’s standpoint, we want them to understand that there are these loans out there that can help them. There are a lot of people that are W2’d and pay stubs, but they might have a little side business after work that they’re working on, or social media, whatever that be.

they’re going to come to a place where they’re going to become an entrepreneur and they’re going to need to utilize business bank statements to qualify for a home loan because that should be their next investment after they start earning some revenue from that side business. From there, you have your owner occupied home, that’s great for the borrowers out there, right? Then you want to kind of look at…

building up that revenue in that company or corporation, if you have an LLC, we do close DSCR loans in an LLC, which is very key, right? So now these borrowers, as they’re building, they have their owner occupied property, they wanna buy a non-owner, they buy it in the LLC, very important, right? That really helps them if they’re gonna Airbnb or rent it, right? For liability and whatnot.

So that really helps and from a tax standpoint as well. If the LLC is purchasing this asset, then there’s some write-offs, you’re not actually taking that money personally. So for the borrowers out there, yes, these loans are available, bank statement loans, DSCR, profit and loss loans. mean, there’s a couple other programs in there, but these are the main ones.

And then for of course for loan officers, I mean if you haven’t used a hit shell funding give us a shot We definitely do do that white glove service and we do all the programs plus more our guidelines are wide open They’re not down, you know, they’re not straight down the fairway as we say, right? You can shank a little bit and we still have some room there to play

Brian Fox (17:02.71)
So yeah, I mean, that’s where we are today. I borrowers have access to some good loans right now if they take advantage of it. And I don’t see non-QM going anywhere. Obviously, like I said before in our conversation, we do follow the CFPB and TRID. So we’re not like private money where this is just rogue and anyone can do anything. We follow the rules of the law, right? The ability to repay and all of that. So.

That’s a great thing because I did go through the 2008 and way back when, right? When there was no rules or laws and our industry just went boom. So having this guide and this map on how to product business is very important for us. So we do follow all those.

Quentin (17:43.929)
I love it, man. I love it, man. Listen, before we rap, if someone wanted to reach out to you, connect with you, collaborate with you, talk about getting along, like, what is the best way for them to reach out to you,

Brian Fox (17:46.605)
that on?

Brian Fox (17:51.906)
Yeah.

Brian Fox (17:58.062)
Man, I I just make it easy. I get all the info at AHLfunding.com. know, it’s on our website. We’re AHLfunding.com. You could click the contact page or just simply email info and it’s me on there. You know, I kind of manage all those emails. So yeah, shoot me a call or email and I’ll shoot you back my number. And I’d love to talk more about.

Just loans, I this is what we do all day long anyway. Figure out how we can help people get a home. That’s our goal.

Quentin (18:27.999)
Absolutely. Absolutely. Well, man, y’all heard it from my friend here, Mr. Fox, Brian Fox from HIO, why am I stumbling at the end? My man, Brian Fox from AHL Funding. Listen, man, I appreciate your time, brother. I appreciate your story. I appreciate your perspective. I love what you guys are doing it. Y’all doing it the right way. And Mr. Brian Fox, thank you so much for being here with us today, man.

Brian Fox (18:35.883)
you

Brian Fox (18:39.959)
Hey, hey, chill!

Brian Fox (18:44.183)
Yes, sir.

Brian Fox (18:56.078)
Great, thank you for the time. I appreciate it. Thank you very much.

Quentin (18:59.027)
No, absolutely, absolutely. And for those tuning in, I know you found value in this. So please make sure you’re subscribed. We have more conversations coming, just like with my friend, Mr. Brian Fox. Listen, I cannot wait to see you on the next episode. So make sure you subscribe so we can see each other. All right, thank you. And we’ll see you next time.

Quentin (19:25.055)
And we’re out,