Right now the program is available to mortgage brokers in California, Arizona, Oregon, Idaho, Colorado, Utah and Texas. While the rate sheet shows that loans are available in amounts from $100,000 to $750,000, the loan-to-value ratio is 70% for borrowers with a 550 FICO score.
The updated version, said company CEO Brian O’Shaughnessy, will have higher LTVs, up to 80%.
Athas’ background is as a hard money lender and that program is willing to lend to borrowers whose credit score is under 500.
“We are a prolific producer of hard money,” he said, and the company found that its growth was more affected by the gap between A-paper lending and hard money and “we wanted to bridge that gap.”
The hard money residential products Athas offers are short-term loans and loans with balloon payments. But for the subprime loans, O’Shaughnessy said the company will be doing 30-year fully amortized loans. The initial roll out included the old 2/28, 3/27 and 5/25 products that dominated the heyday of subprime.
But the 2.0 version will just be the 5/25, he noted. The caps and the rates will be lower as well.
Plans are to roll the program out in other states slowly, although at first it will concentrate adding more western states as well as Florida. The hard money program is a national program with some exceptions.
O’Shaughnessy said he is sure he will see competition arise in the subprime space, noting that some A-paper lenders are trying to bridge that same gap but in the opposite direction from Athas.
The Rama Fund LLC will provide the funding for the product. It was founded by O'Shaughnessy and Alim Kassam, who is also president of Athas. The Rama Fund provides Athas with an in-house pool of capital that it can use to expeditiously make lending decisions, the company’s website said.
Since the program was rolled out a few weeks ago, it has gotten contacted by brokers asking when the program will be available in their state. Another question is when will Athas do 100% LTV, to which O’Shaughnessy replied “never!” But there also have been some detractors calling claiming that subprime was the cause of the crisis.
“We’re bringing back subprime on a sane level. We want some sanity this time,” which is why 80% will be the highest LTV Athas will do, he said.