WSJ: Real Estate Agents Fight Gov’t to Save Commissions; Why Now? Welcome to Our World

THE FED CAPPED MORTGAGE COMMISSIONS IN 2010 In 2010, the Fed was desperately trying to blame the entire 2008 mortgage meltdown on mortgage brokers and loan officers – as opposed to the Fed itself (way too loose of a monetary policy) and Congress (affordable housing laws; Fannie Mae, etc.). As a result, the Fed imposed […]Read More

Are China’s Woes Good for Mortgages and Real Estate? Yes, and No

CHINA LOWERED OUR INTEREST RATES Rates opened up lower today, partially b/c of the issues China is having with some of its more debt-laden companies such as Evergrande (the huge Chinese Developer teetering on bankruptcy, that was all over the news last week) – according to Barry Habib of MBS Highway. Mr. Habib reminds us […]Read More

Great Incentives VS. Incentives Gone Wrong (& Cobras Too)

INCENTIVES ARE EVERYTHING/INCENTIVES GONE WRONG ARE FASCINATING! Great incentives create great outcomes. But unfortunately, humans are astonishingly bad at establishing incentives – a point investor, entrepreneur, and writer, Sahil Bloom recently made in a fascinating Twitter thread. Many people, myself included, have suffered from an inability to create the right incentives, which often lead to […]Read More

Mortgage Reminders: My Inconsistent Fed Comments; Rent Backs; Owner Occ Ratios; Attached PUDs/Townhomes; 12 Condo Considerations

Here are a few random reminders. Powerless Fed Vs. Inflation-Causing Fed. In response to my recent blog about the Fed being “Powerless,” I got this comical point from an agent I really enjoy hearing from: “I know they say that great minds can hold contrary thoughts with ease, but how do you square a powerless Fed […]Read More

The 3 Primary Mortgage Lending Channels: Banks, Mortgage Banks & Brokers

We publish this blog every few years b/c it always gets a surprising amount of interest. It is relevant now b/c the broker channel seems to be expanding again much faster than anyone anticipated. I explain why JVM is no longer in the broker channel below. THREE PRIMARY CHANNELS FOR MORTGAGES 1. Commercial Banks and […]Read More

Still No Housing Bubble – B/c Rates Are 3% Lower Than In 2006!

MBS HIGHWAY HITS HOUSING BUBBLE AGAIN Barry Habib, Founder of the MBS Highway, hates it when the media spreads irrational fear about a housing bubble. He also shares marketing materials that subscribers to his content are allowed to share without attribution to him, but that is anathema to me. Below is a script he recently […]Read More

Americans Can No Longer Move To Hot Job Markets; Does It Matter?

SOUTHWEST AIRLINES SAVES ECONOMY? Southwest Airlines and the proliferation of nationwide newspapers (like USA TODAY) were a major reason we saw so much economic growth in the 1980s. So said an economics professor I had in the 1980s. Airlines had recently been deregulated and Southwest was the first to offer dirt cheap flights – that […]Read More

Proving Taxes Are Real & Filed; IRS Form 4506-C

Mortgage lenders are required to get the last two years of tax returns for almost every borrower – and then prove that the tax returns are authentic and actually filed with the IRS. IRS FORM 4506-C This is why every borrower has to sign an IRS Form 4506-C (formerly called a 4506-T) as part of […]Read More

The #1 Reason Renters Want To Buy A Home

FIXED HOUSING PAYMENT IS NOT THE BIGGEST INCENTIVE TO BUY In August I blogged about Rent Vs. Buy Comparisons In the Age of Inflation, pointing out how comforting it is to buy a home and lock in a fixed housing payment when rents have been climbing as much as 30% per year in some markets. […]Read More

Is The Fed The Wizard Of Oz (Powerless)? Why It Matters

In the iconic movie The Wizard of Oz, all of the characters thought the Wizard was an all-powerful being who controlled everything and everyone. But, in the end, we found out that the infamous Wizard was really just an old man behind a curtain playing tricks with loudspeakers, smoke and mirrors. RENOWNED RESEARCH ANALYST SAYS […]Read More

Change Jobs, Lose Bonus Income & LOSE HOUSE!

It is usually 100% OK to change jobs at any time IF … borrowers are NOT dependent upon bonus, overtime or commission income to qualify. If, however, borrowers are dependent upon bonus, overtime or commission income to qualify for a loan (very common in today’s world), changing jobs can be a deal killer! This is […]Read More

Don’t Finish Your Basement (or Garage or Patio) IF…

“Your godda***d appraiser only gave $7,500 to my basement after I spent 85,000 f**king dollars finishing it! Go f*** yourself!” So said a borrower to me years ago after he reviewed an appraisal of his home that he clearly did not like (to put it mildly). Knowing that “the customer is always right,” I tried […]Read More

The Most Valuable Advice Agents Can Give Clients! (MOST VALUABLE FOR ALL OF US)

HOUSE FLIPPING GONE WRONG When I used to flip houses back in the day, I often worked with an extremely experienced agent who would help find the homes and write the contracts. He was also a master at the art of the “quick fix” (new floors, cabinets, counters, appliances, fixtures, paint and a bit of […]Read More

Bedroom Counts And Home Values – A Very Big Deal!

WHAT CONSTITUTES A BEDROOM? I wrote a blog last year called What Constitutes A Bedroom? in response to an agent who was angry b/c our appraiser refused to deem a 42 square foot (sf) room “a bedroom.” The appraisal came in low b/c the house was correctly deemed a two-bedroom instead of a three-bedroom, as […]Read More

6 Reasons Why Refis Are SO MUCH EASIER Than Purchases

We often see borrowers who are reluctant to refinance into a lower rate – even when the new loan will be “no cost” and save them hundreds of dollars every month. Unfortunately, this reluctance is sometimes fostered by the stress those borrowers endured during their purchase. As a result we like to emphatically remind everyone […]Read More

Is Yelp Dead?

USING YELP IN THE MIDDLE OF NOWHERE My kids, brothers, nephew, and I take motorcycle trips every summer, and I just got back from our recent excursion through the Colorado Rockies. Everywhere we went, no matter how remote, my nephew would pull out his phone to search Yelp for places to eat – and Yelp […]Read More

Conventional vs. Conforming vs. Gov’t vs. Jumbo Loans; Bias For Action

CINNABON STORY – BIAS FOR ACTION I heard this story on a podcast a few months back and just had to share it. When Cinnabon first started, they could only afford to lease very small spaces that required them to place their ovens in front; as a result, passersby could easily smell the aroma when […]Read More

Why Appraised Values Have To “Season” After A Purchase

“I just bought the property for $800,000 but it is worth $1,000,000 now, and I would like to refi using the higher appraised value…” We get emails like the above all the time, and sometimes we can garner the higher appraised value. But often we can’t. This is why. APPRAISERS CORRELATE TO PURCHASE PRICE This […]Read More

#1 Trait Super Successful People Share

CAR DEALER SELLS TO… ANYONE AND EVERYONE In the late 1970s, when I was in high school, I was hitchhiking on Tatum Boulevard in Phoenix, AZ b/c… I had just totaled my car and b/c people still actually hitchhiked then. Anyway, a brand-new Toyota Supra stopped to pick me up. The driver was extremely friendly, […]Read More

When “Big Bank” Purchases Die And Come To JVM; What We Learn

A listing agent we know well called us recently b/c one of his listings died at Chase at the 11th hour – and he wanted us to salvage the deal. I am not trying to beat up on Chase either, as we sell a ton of our jumbo production to them and we also know […]Read More

Learning From Amazon’s Many Failures; Failing To Succeed?

We try various initiatives all the time at JVM – and often fail spectacularly. A few things that come to mind are a team competition we set up in 2012 that utterly destroyed morale; a profit-sharing program we set up in 2014 that turned out to be blatantly illegal (our attorney panicked and immediately made […]Read More

Missed Rent Payments Are OK – Or Are They?

WOULD YOU DO THIS LOAN? It was sometime in 2006 when a rep I knew well from the now defunct Washington Mutual (WaMu) called me to ask if I personally would “do the loan” that I submitted. My answer was of course not. It was a 90% combined loan-to-value (LTV) loan (1st and 2nd mortgage […]Read More

Inflation Up; Rates Up; Explained In Terms of Porsches; All About “Buying Power”

THE REFI BOOM THAT WASN’T When rates plunged a few weeks ago in response to renewed COVID concerns and weak economic news, the entire mortgage world was gleeful b/c we thought we had another refi boom on our hands. But alas, it was not meant to be, as strong employment numbers AND INFLATION crashed the […]Read More

Rent Payments & Rental Income To Qualify

Here is some important info about using rental payment history and rental income to qualify. GREAT NEWS: “DU” USES RENT PAYMENTS NOW On the good news front, Fannie Mae announced last month that its automated underwriting system (DU) will now take into account rental-payment-histories, to make it easier for renters to become homeowners. Here is […]Read More

Lending In The Age Of Lying; “Reframing” Is OK; Fraud Is Not

MORTGAGE BANK OWNER EXITS BUSINESS PRIOR TO 2008 Heejin and I were chatting recently with one of the few major mortgage bankers to have the foresight to get out of the mortgage business prior to the 2008 mortgage meltdown. He knew the end was near b/c he was playing golf at Pebble Beach with a […]Read More

Holy High Appraisal Fees, Batman! Please Warn Clients!

Economist Milton Friedman famously said, “Inflation is always and everywhere a monetary phenomenon.” (meaning that it is always caused by increases in the supply of money) But, when it comes to appraisals Milton might be … wrong,** as hard as it is for me to type that. 😊 Appraisal fees have risen from as low […]Read More

Rent Vs. Buy Comparison – Follow Up To Responses; ADU Follow Up Too

Yesterday, I blogged about Rent Vs. Buy Comparisons In The Age of Inflation, and I got a surprising amount of feedback, including the following: “I put 5% down, and my housing payment is $500 lower than my Mom’s rent.” “You are not accounting for maintenance costs!” “Do you guys do ITIN Loans?” “Unsubscribe” 😊 5% […]Read More

Rent Vs. Buy Comparisons In The Age Of Inflation

$500,000 HOME APPRECIATES $200,000 IN 9 MONTHS My wife Heejin bought a house in Plano, TX, in November for $519,000. We put down 20%, and our PITI is $2,725. The house was rented for $3,700 per month when we bought it, so we could have cash flowed nicely from the start. The tenants moved out […]Read More

Using PMI To WAIVE Appraisal Contingencies

I am beating the Private Mortgage Insurance (PMI) dead horse again, at the suggestion of an agent who inspires a lot of my blogs (thank you, Jeff Weissman). In any case, he suggested explaining PMI options up front to clients who might want to make offers with no appraisal contingencies. This of course is a […]Read More

Why Housing Is Actually More Affordable Today Than In 1980!

WHY HOMES ARE MORE AFFORDABLE TODAY In the midst of my daily excursion into the bowels of Twitter, I saw a great tweet from the Center for Human Progress. It had a link to this excellent article, titled U.S. Housing Became Much More Affordable Over The Last 40 Years. It was fascinating to say the […]Read More

How To Use Single Premium/Lump Sum PMI To Cover Appraisal Shortfalls

Recently, I blogged about why Private Mortgage Insurance is “Awesome,” pointing out why its stigma from the 1990s is so underserved. One of the many benefits of PMI is using it to help cover appraisal shortfalls, and I wanted to elaborate on that in this blog. $900,000 PURCHASE APPRAISES $100,000 UNDER Assume the following: Purchase […]Read More

No Housing Bubble Here Part XXII; 12 Million More Households Than In 2007!

17% ANNUAL APPRECIATION SCARES PUNDITS Housing appreciated 16.6% from May of 2020 to May of 2021. This is a record and it is again sparking media concerns that we are in a housing bubble. So, I am hitting the issue again to allay concerns, and I am again relying on our friend Barry Habib, founder […]Read More

Private Mortgage Insurance (PMI) – When & Why It Is Pretty Awesome

Private Mortgage Insurance (PMI) earned an unjustified bad rap back in the 1990s. Investopedia in fact lists “six reasons to avoid PMI,” including: (1) Cost; (2) No Longer Tax Deductible; (3) Heirs Get Nothing Because It Is Not Benefits Insurance; (4) Hard To Cancel; and (5) Payment Is Permanent. But – many of those “reasons” […]Read More

Reverse Mortgages For Millionaires? Removing The Reverse Stigma

I recently chatted with a couple that owes about $800,000 against a $2.5 million home. They are in their early to mid 70’s and they want to keep their home, lower their housing payment to free up cash for other expenses (such as long-term care insurance), and fully retire. Most of their net worth is […]Read More

Virtual Assistants – Why Everyone Should Hire Them; Changing the Labor Landscape

MORTGAGE BANK HAS 2,000 VIRTUAL ASSISTANTS My wife Heejin and I were recently chatting with the president of a major mortgage bank and he mentioned that his firm employed 2,000 virtual assistants (VAs) in the Philippines. He was not entirely sure what they all did, but he was amazed by their resumes, as many had […]Read More

Cash Buyers & “Scary” Signs Of The Times; False Mailers; Selling Info

OVERHEATED MARKET AWASH IN CASH – OR SIGN OF THE TIMES? A close friend of mine bought a home in Scottsdale, AZ, in November for less than $1.1mm. She visited the home a couple of times, played a bit of golf, swept the patio, made a few improvements – and listed the home for sale […]Read More

BEST NEWS EVER! Fannie And Freddie Eliminate “Adverse Market Fee;” Reduce Rates By 1/4%!

I can think of many examples of things that would constitute “the best news ever.” Hearing “snow day/school canceled” announced on the radio when I was a kid on Western Minnesota’s prairie is definitely up there. And, so is the time my friend’s older brother scored us not one but TWO kegs of beer for […]Read More

Financing And Building ADUs Or In-Laws

CUTEST HOUSE I EVER SAW I have been in the mortgage industry since 1994 and have seen thousands of homes in every setting imaginable. And the cutest house I have ever seen was a 3,500 square foot brick, single-level ranch house on ten acres in the wine-growing region of Livermore Valley in California. It had […]Read More

Nothing Makes Things More Unaffordable Than Affordability Subsidies!

FOGGING THE MIRROR People often make fun of my alma mater (The University of Arizona) by saying that “kids only need to fog a mirror to get in.” And that makes me so mad b/c it is so misleading. And, this is why: The kids that could fog a mirror were the smart kids! No […]Read More

Mortgage Applications Down 30%; What Does It Mean For Borrowers? Refi Boom Coming?

2020 = BEST YEAR EVER FOR MORTGAGE INDUSTRY The mortgage industry had its best year ever last year (over $4 trillion of funded loans), as rates fell to all-time lows and both purchases and refis shot up to record levels. Industry capacity could not come close to meeting demand, and lenders were able to charge […]Read More

Are Lenders Obligated To Share Appraisals?

We often pay for purchase appraisals upfront on behalf of clients for a few reasons. Rush Fees: We pay a large rush fee that we don’t charge our clients and b/c we can’t separate the rush fee from the standard fee, we just pay the entire fee upfront (we don’t want our clients paying the […]Read More

Real Estate Commissions; Antitrust; Follow The Money; OPEC; Why It’s A Moot Point

OPEC BRINGS AMERICA TO ITS KNEES! OPEC is probably the most famous “cartel” of all time b/c it effectively brought America to its knees in the 1970s with its oil embargo and price floors. OPEC or the Organization of Petroleum Exporting Countries was founded in 1960 and by the 1970s it had so much power, […]Read More

Is Co-Signing By Non-Occupant Co-Borrowers Overrated? Blended Ratios Explained

“MY MOM MAKES $25,000 PER MONTH AND WILL CO-SIGN TO HELP ME QUALIFY” A young borrower told us that b/c his Mom was a successful CFO who wanted to help him buy a home. BUT, Mom had a $6,500 housing payment of her own, a $1,500 Range Rover payment, $3,000 of support payments to her […]Read More

Beware of VACATIONS :) Rates Way Down Again; Why? Stimulus Will End

HOLY LOW RATES, BATMAN! (Wallowing in Wrongness) For months now, I have been repeating the warnings of various pundits about runaway inflation and rising rates. But rates seem to continually fall despite inflation concerns, and this week was another example as rates fell precipitously again. I and many others (like Barry Habib) thought we’d see […]Read More

DON’T Pay Down Your Mortgage With Lump Sums; Here’s Why

Yesterday, I blogged about “recasting” or re-amortizing a mortgage after a lump sum paydown. And a friend of mine who runs a major mortgage company on the East Coast (Craig Strent with Apex Home Loans) emailed me to suggest today’s follow-up blog – pointing out why paying down a mortgage too quickly is usually a […]Read More

Recasting Or Re-Amortizing After Paying Lump Sum

QUICK ASIDE: NEED FOR SPEED REQUIRES COOPERATIVE ESCROW OFFICERS 😊 A frequent cause of delays for us is slow escrow officers who sometimes get openly hostile when we request info or documents in a timely (under 24 hours) manner. This is a quick reminder that we need escrow officers who are fully committed to speed […]Read More

The Need For Speed; 14-Day Closes; Appraisals Remain The Problem

14-DAY CLOSES ARE BACK! We are bringing our 14 Day Closes back in full force now, but with certain caveats. We cannot close the following transactions in 14 days: (1) Condos – b/c we have to wait for HOAs; (2) Jumbos – b/c underwriting and required appraisal reviews take longer; (3) Complex self-employed borrowers b/c […]Read More

Housing Inventory Shortages – Is Help On The Way?

INVENTORY SHORTAGE – WILL THERE BE RELIEF? Homebuyers nationwide are facing severe housing inventory shortages while median home prices continue to rise. Pundits are weighing in on whether relief is on the way or not. Ken McElroy says relief is on the way. In this four-minute video, real estate guru, Ken McElroy points out why […]Read More

Why Cash (And Living Lean) Is King: When Steve Jobs Was Broke

MAKING MILLIONS AND MOVING BACK TO MOM’S BASEMENT In 2010, NPR released its now very famous “Giant Pool of Money” podcast about the 2008 mortgage meltdown. And – in it they interviewed a former subprime mortgage salesman who had been making $1 million per year for several years, even though he was right out of […]Read More

Competing Against “Losers” (Companies Willing & ABLE To Lose Millions Or Billions)

Ken McElroy is one of America’s most prominent real estate investors. He runs a huge real estate fund, owns hundreds of millions worth of real estate himself, works with “Rich Dad” Robert Kiyosaki, publishes a prominent newsletter and frequently comments on real estate trends in general. That is why I took notice when Ken recently […]Read More