You submit a file to an alternative lender and it’s turned down. Do you write that lender off for those types of deals?
If you write a lender off after one “No”, you may be doing yourself a disservice. In the world of MIC and alternative lending, it’s important not to give up, even if you’re turned down.
Don’t judge a lender based on one, “No”. If you do, you could be missing out on future opportunities. We realize you don’t get a “second chance at a first impression” but don’t let one file ruin the potential for many future wins.
It’s incredibly important to remember that underwriting for alternative lenders changes from time to time.
And the biggest driver of that change is the amount of money that the lender has available to lend. Unlike banks, MIC and alternative lender funds are limited. If the MIC or alternative lender is close to running out of money, they may tighten up their underwriting, resulting in them declining your file. But alternatively, they can be much more aggressive when flush with cash.
It’s entirely possible that the decision on a file can be due to portfolio balance. Sometimes the lender has a need for more residential properties, sometimes more commercial. As alternative lenders, we have to adjust our underwriting to find deals to maintain a balance. And the response you receive can simply come down to a matter of timing.
The point is simply that for deals that don’t fit the ‘A’ lenders underwriting, be sure to still send them to all of your MIC and alternative lending partners. Even if those lenders haven’t funded that type of deal in the past, don’t avoid them. You never know, and could even end up pleasantly surprised by which lenders have an appetite and great pricing for your deal.