I have 10 standing orders in 2 groups.
Group 1: Auto Funding (AF)
Group 2: Non Auto Funding (NAF)
I needed to split into 2 groups because loan bid closing characteristics for each type of loan vary vastly. AF close when they are 100% funded. NAF close at a fixed time when the auction expires. Therefore, NAF standing orders only bid on loans that are already 100% funded and AF standing orders will bid on any loan that meets the other standing order requirements.
Has everyone heard of debt-to-income ratio (DTI)? All you basically need to know is that the higher your DTI the more debt your are carrying compared to you income. A higher DTI is a higher credit risk statistically.
Once in the 2 general groups the 5 separate orders are: Low DTI (less that 15% DTI), Medium DTI (less than 25%), High DTI (less than 40%), Extreme DTI (less than 50%), and Any DTI.
For each higher DTI the required interest rate goes up in order to bid the loan.
So far so good?
Stay tuned for posts on each standing order.
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