How solving challenging files can give private lending brokers clients for life
Part of being in the private lending and non-QM space is having loan files that agency lenders might not be interested in working with. For private lending brokers, finding solutions for challenging files is a key part of their job.
The non-QM space has found a way to remain strong even in a higher-rate environment. And while many of these loan files resemble those sent to Fannie Mae and Freddie Mac, others require additional work to be processed.
Three broker executives discussed the topic at the National Private Lenders Association (NPLA) conference on Tuesday in Atlantic City.
One was Christopher Pepe (pictured top), CEO of LoanGeek.com. He said that one of the things they take pride in is their ability to handle complex files. While some in the industry have lamented that high interest rates are keeping deals from happening, the files Pepe and his team are dealing with have more complicated problems.
“We’re very active with deals that have hair on them,” Pepe said. “We see a ton of them. That’s one of the value-adds that we have to our partners. Of course, you can send me the easy stuff, but the easy stuff, everyone is going to fight over it. The complicated stuff, I feel like, is where a lot of the opportunity is.”
Pepe provided examples of challenging files his team had recently worked on.
“Last month, we funded a $6.5 million second mortgage on a spec property,” Pepe said. “Not a lot of people would even consider that loan, but that’s something that’s outside of the box, that is challenging. We have another deal that’s not yet funded … it’s an $18 million hotel deal. The client’s in default on the first mortgage, default on the second mortgage. We didn’t even know they had a third mortgage until the title came in.
“Mechanics liens, partners are fighting, it’s a disaster. Most lenders would probably walk away from it, but the leverage is low on the property. It’s like a 30% LTV or 35% LTV. And this lender happens to not care about all that stuff and really likes the asset.”
Opportunity in the challenge
Pepe noted that part of his job is convincing lenders that some of these risky files are worth taking on.
“I think there’s a lot of opportunity in the challenge,” Pepe said. “We just got another file, a $30 million first mortgage on an asset in Long Island, and the client hasn’t paid his mortgage in 10 years. How do I even speak to a lender and say, ‘Oh yeah, he’s going to pay you, but he hasn’t paid (his mortgage) in 10 years?’ Maybe someone would consider that.”
Private lenders must adapt to an "uncertain market," says Jonathan Hornik of the NPLA. He notes that escalating construction costs require different underwriting approaches for large commercial projects. https://t.co/kjDvbbASP5
— Mortgage Professional America Magazine (@MPAMagazineUS) June 25, 2025
That challenge is the part of the job that makes it rewarding for Pepe. He and his team work to find solutions for difficult files. And it is a balancing act when easier files can be funded quicker than the challenging ones.
“You also have to keep in mind that time is money, and stuff that is straight down the fairway, those can get done quickly,” he said. “So, you can probably fund 50 files by the time we’re going to fund this one hotel loan. But we want to fund both, so I think a big value-add is on the complicated files for us.”
Being upfront with lenders
Pepe said one of the keys to getting challenging files closed with lenders is being upfront about any potential issues with the file.
“Every time we submit a file to a lender, we have three categories we look at,” Pepe said. “Aside from all the information on the deal itself, we like to generate a summary of the deal. What are the challenges, or what’s the hair on the deal? Most deals have hair, and I like to tell the lenders up front so they don’t have to sift through it or think we’re hiding something.”
His company utilizes artificial intelligence (AI) to ensure the summaries sent to lenders are consistent across all deals.
“Every client speaks differently,” he said. “So, to have a consistent format, we’re using AI to help generate those three categories when it goes out to lenders, so every submission looks fairly similar.”
For Pepe, it’s about helping clients find solutions for challenging loans in the non-QM and private lending space. This leads to those clients returning for future loans, allowing his company to get repeat business.
“I’m a firm believer that if we get in a real estate investor today, and that investor owns 50 properties, 75 properties, 100 properties, that could be a client for life,” he said. “You can transact with that client every month for the next few years if you build the trust in them.”
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