Tan Karim10 May 2024

How Much Mortgage Can I Afford ft. Tan Karim

1Frameworks

13Insights

Frameworks in this episode

Finance5 steps

The Mortgage Waterfall Test

Test borrowers against progressively broader mortgage options

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Insights & moments

The myth-busts, hot takes, explainers, and tools worth keeping.

Explainer· 4

Explainer15:30

Why Running a Non-QM Lender Is So Capital Intensive

Karim explains that non-QM lenders must balance thin margins, liquidity, operating talent, origination costs, securitisation, and service. A problem in one part can threaten the whole operation, while the lender must still price competitively and sell or securitise loans profitably.

Securitising loans is expensive and capital intensive
Lenders must fund talent and operations while staying competitive
Loans ultimately need to be sold or securitised at a profit
The operating system has many interdependent parts

“margins are so thin right now it's really hard to make a buck right now”
Tan Karim · 16:00

“there's so many so many moving Parts in these non-qm companies that one thing knocks down and the whole thing can fall apart”
Tan Karim · 16:00

#non-qm#securitisation#lender economics

Explainer17:30

How Bank-Statement Loans Serve Nontraditional Earners

Karim says many younger first-time buyers have nontraditional work and multiple income streams rather than regular wage-paying jobs. He presents personal bank-statement lending as one route for self-employed borrowers whose cash flow is visible even when standard income documents do not fit.

Some first-time buyers earn through multiple or unconventional activities
Tax planning can make standard income documents a poor fit
Karim says Change used 12 months of personal bank statements for the product discussed

“that have two or three different streams of income”
Tan Karim · 19:00

“12 months of personal bank statements and nothing else”
Tan Karim · 19:30

#bank statements#self-employed#first-time buyers

Explainer21:30

The P&L Loan That Did Not Require Matching Bank Statements

Karim explains that some lenders ask borrowers to support a CPA-signed profit-and-loss statement with bank statements showing matching deposits. He says Change Wholesale's recently launched P&L product did not require those coinciding statements, which could help borrowers whose money enters several accounts.

Some P&L products require two or three months of supporting bank statements
Deposits may be spread across multiple accounts
Karim says Change accepted the P&L without coinciding bank statements

“we don't need bank statements to coincide with the pnl loans”
Tan Karim · 21:30

“we will take a p&l that doesn't have a bank statement coinciding with it”
Tan Karim · 22:00

#p&l loans#self-employed#underwriting

Explainer29:30

The May 2024 Community Mortgage Guideline Update

The episode announces a May 2024 change to Change Wholesale's no-income-documentation Community Mortgage. Karim says the reserve requirement fell substantially from 18-24 months, proceeds from the loan could count toward reserves, the minimum credit score remained 680, and stated loan-to-value limits were 70% for cash-out and 75% for purchases. These were episode-date product terms, not permanent guidance.

Required reserves were described as falling substantially from 18-24 months
Cash from the loan could be used as reserves
Karim said the credit-score floor would remain 680 for the time being
The announced LTV was 70% cash-out and 75% purchase

“you can use the cash from the loan that you're borrowing as as reserves”
Tan Karim · 30:30

“we're going to keep it at 680 for a while”
Tan Karim · 31:00

#community mortgage#no documentation#loan guidelines

Story· 3

Story05:30

A $10-an-Hour Dorm-Room Ad Started a Mortgage Career

Karim traces his mortgage career to a $10-an-hour telemarketing advertisement he saw while at UC Riverside in 2000. He drove from Riverside to Irvine, got on the phone, and taught himself to use the Point mortgage software while doing the job.

Karim entered the industry in 2000 while at UC Riverside
The opportunity was advertised only as $10-an-hour telemarketing
He learned the Point software by using it himself

“There was an advertisement in the dorm rooms for $10 an hour tell marketing”
Tan Karim · 05:30

“I learned how to use Point by myself just by doing that $10 an hour”
Tan Karim · 06:00

#career story#mortgages#self-learning

Story10:00

How the 2008 Crash Changed Tan Karim's View of Money

Karim describes the 2008 crash as the pivotal moment in his career. Losing income and his house showed him that a strong market could stop, changed how he viewed spending and expenses, and pushed him to study the capital-markets machinery behind mortgages before returning to the industry in 2010.

The severity of the crash took months to become clear to him
The downturn changed how he viewed expenses and financial responsibility
He studied CDOs, mortgage-backed securities, and capital markets
He returned to mortgages in 2010 with the same core group

“the music truly stopped”
Tan Karim · 11:00

“I learned a lot about the business during that downturn”
Tan Karim · 12:30

#2008 crash#money habits#mortgage industry

Story13:30

Why Tan Karim Took the Early Bet on Change Wholesale

Karim says he would not have moved into Change Wholesale in 2018-19 without a core group of people he trusted. Their presence gave him confidence that the non-QM lender could work, and he joined as the second wholesale person before the company expanded rapidly.

Trust in the founding group drove Karim's decision
He joined as the second wholesale hire
The company grew from roughly 50 to more than 1,500 employees in about 18 months

“we had no doubts in our mind because of who we surrounded ourselves with”
Tan Karim · 14:30

“I was the second wholesale guy to come in there”
Tan Karim · 15:00

#non-qm#career decisions#team trust

Takeaway· 6

Takeaway01:30

Tan Karim's Rule: Never Leave a Broker Hanging

Tan Karim says he begins by answering messages missed overnight, including emails from brokers in other time zones. He treats rapid replies to missed calls and emails as a personal service rule and continues taking calls while walking or travelling between brokers.

Check overnight email before beginning the rest of the day
Return missed calls or emails within minutes when possible
Use walking and travel time to stay available to brokers

“that's one of the things that I've always prided myself on is not to ever miss a phone call or an email”
Tan Karim · 02:00

“I don't like being stationary for too long”
Tan Karim · 03:00

#customer service#responsiveness#work habits

Takeaway22:00

Why Tan Karim Forces Himself to Reset Once a Quarter

Karim says the intensity of thinking about loan volume follows him into his sleep. To create a reset, he tries to travel at least once a quarter and also uses long beach walks to work by phone while relaxing.

High-pressure work can continue mentally outside office hours
Karim schedules travel at least quarterly as a reset
Beach walks let him combine movement, calls, and relaxation

“I try to make sure I travel at least once a quarter”
Tan Karim · 22:30

“I do need to reset”
Tan Karim · 22:30

#recovery#travel#work-life balance

Takeaway24:30

How Karim Helps Small Brokers Find Non-QM Lead Streams

Karim says he acts as a consultant to smaller broker shops that are eager to grow. He first helps them identify audiences such as self-employed people, divorcing borrowers, or people needing hard-money takeout loans, then teaches them how to understand and close the resulting loan.

Teach smaller brokers by showing what successful originators do
Look beyond standard conforming-loan lead sources
Identify and create a lead stream before teaching loan execution
Efficient closing matters as much as getting the prospect

“become a consultant for these smaller shops”
Tan Karim · 25:30

“getting somebody in the door is one thing closing the loan is another”
Tan Karim · 26:30

#broker growth#lead generation#non-qm

Takeaway34:00

Making Non-QM Approval Less Scary, Not Merely Faster

Karim defines an easy mortgage process partly by how it feels to the loan officer. He reviews approvals before they reach brokers, looks for underwriting mistakes or excessive conditions, and communicates unavoidable issues so the experience is less stressful even when it is not quick.

A long or impossible-looking condition list creates anxiety
Karim reviews approvals before they reach EMC loan officers
Errors and over-conditioning should be challenged upstream
Ease can mean less fear and stress rather than pure speed

“making it easy isn't always um you know quick but it's making it stressfree making it less scary”
Tan Karim · 36:00

“everything has to go through me or somebody that's just like me on my team”
Tan Karim · 37:00

#underwriting#customer experience#loan approvals

Takeaway38:30

Why Change Favoured Organic Growth After Hypergrowth

Karim says Change Wholesale's earlier rapid expansion made hiring sufficient underwriters difficult and strained internal systems. For the next growth phase, he preferred a more organic approach that avoided relying as heavily on remote contract underwriters who did not share the in-house operating model.

Rapid growth created a shortage of underwriting capacity
Contract underwriters were harder to align with internal practices
The expansion taxed internal systems
Karim favoured more organic growth for the next cycle

“we could not hire fast enough”
Tan Karim · 39:00

“this time I think it's going to be organic growth”
Tan Karim · 39:00

#growth#hiring#operations

Takeaway42:30

Karim's Goal: Deepen Existing Broker Relationships

For his goal at Change Wholesale, Karim says he wants to educate existing partners and help them grow rather than prioritising new broker acquisition. He points to the satisfaction of seeing individual loan originators increase their monthly volume as the result he values.

Educate current partners about the products already available
Prioritise relationship depth over continually finding new brokers
Measure success partly through partner growth

“I want to grow the relationships that I already have”
Tan Karim · 43:30

“there's nothing that makes me happier than to see you know specific Lo's going from you know averaging a million to two million a month…”
Tan Karim · 44:00

#partnerships#broker education#relationship growth