By 2027, over 50% of the US workforce is likely to participate in the gig economy.1 So, how will this impact mortgage lending? The gig economy and self-employed individuals pose unique challenges for mortgage underwriting due to the variable nature of their income and the need to demonstrate stability and consistency over time.

In this episode of Talk Data to Me, we delve into the world of gig economy and its impact on the mortgage lending process with Jillian Sorensen, Vice President, Account Executive at Flagstar Bank, and Heather Lundy, Contract Processor at Mortgage Pro Shop. Our expert guest sheds light on the unique challenges faced by gig workers, self-employed individuals, and independent contractors when it comes to qualifying for a mortgage. We explore the qualifications criteria, income verification, and loan programs available for these borrowers and how lenders can help support them.

Join us as we unravel the complexities and provide valuable insights for lenders looking to help gig workers secure a home loan. In this episode, we discuss:

The gig economy's impact on mortgage lending and how it has transformed the traditional employment landscape.

Differentiating gig work from business owners and independent contractors, including the differences in qualification criteria, who qualifies as a "self-employed" borrower, and how seasonality and second jobs can impact a borrower's ability to qualify with their gig work income.

Demonstrating income stability for gig workers and ways to show a history of consistent income and demonstrating the likelihood of future earnings.

When the two-year self-employment rule applies, and when it does not. While most lenders and investors require a two-year history of self-employment, we explore the exceptions to this rule.

Interest rate implications for gig workers and the factors that the factors that lenders consider when determining interest rates for gig workers and self-employed individuals.

Loan programs are available for self-employed borrowers; shedding light on the guidelines and options provided by FNMA, FHLMC, FHA, and VA loans.

Check out the video version of our podcast at Certifiedcredit.com/podcasts.

About Our Guests

Jillian Sorensen

Vice President, Account Executive - Flagstar Bank

Jillian started in the Mortgage industry by chance in 1998. After buying her first home, she befriended her Loan officer who brought her into the industry. She started as an LO assistant, moved through processing, office manager and then struck an agreement to buy the mortgage company.

She met Flagstar early on and began using their warehouse line and technology. Flagstar taught her to do more with less. Flagstar’s dedication to education and training inspired her and in 2003 her Mortgage company became delegated with Flagstar. Flagstar continued to grow and innovate with new products and services and eventually helped her to become a full-service mortgage bank. She sold my company in 2005 and went to work for a large mortgage company where she gained experience managing a large staff and full delegated operation, including secondary and sales.

Heather Lundy

Contract Processor - Mortgage Pro Shop

Heather is an experienced Mortgage Underwriting Manager with over 30 years of industry expertise. She has a strong background in DU/LPA/HELOC/JUMBO/NON-QM underwriting, making sound product recommendations while effectively managing risk. Heather excels in fostering collaborative relationships with sales teams, brokers, correspondents, retail sales, and processing departments. Her focus on maintaining high-performance standards and identifying opportunities for improvement has consistently driven success throughout her career.

1 Gig Economy Statistics: Demographics and Trends in 2023. Team Stage. 2023.

https://teamstage.io/gig-economy-statistics/#:~:text=4.-,Over%2050%25%20of%20the%20US%20workforce%20is%20likely%20to%20participate,likely%20to%20have%20joined%20it.

Lending to Gig Workers, Self Employed, Independent Contractors [Episode 31]