2021 Predictions: Rates, Inflation, Housing & Affordability

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I often point out how difficult, impossible and/or ineffective it is to make predictions for anything nowadays. This is because we are in uncharted waters when it comes to this much Fed and government involvement in our economy, making it impossible for anyone to predict accurately b/c there are no precedents to rely on. BUT […]Read More

Domino’s $8 Pizzas & Reduced Commissions; The Future of Real Estate & Mortgages

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DOMINO’S PIZZA REIGNS SUPREME When I was in college almost 40 years ago, Domino’s Pizza was a lifesaver b/c poor college kids could get large pizzas delivered for only $6!! What is truly amazing though is that Domino’s is still going strong with the same model, and pizzas only cost $2 more than they did […]Read More

Point Of Sale Or Online Loan Application Systems; Why They Matter

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I have an acquaintance who sometimes refers to individuals he really disdains as “POSs,” and I always find it odd that he would call someone a “Point of Sale” b/c that is all that POS means to those of us in the mortgage industry. 😊 While the first POS system goes back to 1879 with […]Read More

Closing Cost Credits; Agent Credits Allowed; Reminders

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I frequently blog about using “Lender Credits” to help cover closing costs, including this blog from September.  Closing cost credits are often necessary to help cash-starved borrowers close transactions, as total closing costs can easily exceed $10,000 for even inexpensive homes, depending on transfer taxes and other fees local to a particular county. AGENT CREDITS […]Read More

2.7 Million Borrowers Still In Forbearance; Foreclosure Crisis Coming?

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The WSJ reported recently that 2.7 million borrowers are still in forbearance. That is about 5.5% of all borrowers, down from about 8.5% in June, but the number of borrowers in forbearance is no longer falling and many market-watchers are nervous. A weakening economy is exacerbating concerns, as retail sales have been falling, employers have […]Read More

Manufactured Homes – Guidelines, Confusion, Tough Appraisals, Higher Rates

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With truly affordable homes getting harder and harder to find, many buyers (and agents) are looking at manufactured homes as lower-cost alternatives. But, manufactured homes are not as easy to finance as many might hope. Here are just a few considerations. DEFINITION OF A MANUFACTURED HOME Per our mortgage bank: “any dwelling unit built on […]Read More

Jumbo Mortgages – Why Are They So Much Less Profitable?

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We are great at funding jumbo loans – which is a blessing and a curse. “Jumbo loans” are any loans that exceed conforming (Fannie/Freddie) loan limits for a given area. Our jumbo skill is a blessing b/c it enables us to service our many jumbo clients and maintain relationships with our many agent partners in […]Read More

Mortgage Rate Rules Out The Window; Confirmation Bias; Kool-Aid Mustaches, Sting-Rays & Snakes

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In the pre-internet days of the mid-1990s, we would call the “Bond Market Hotline” on the telephone (with a cord 😊) several times per day to see how the 10 Year Treasury was performing. This is b/c the 10 Year correlated so closely to mortgage rates. If the 10 Year prices were falling, for example, […]Read More

Why Rocket/Quicken Did Not Disclose Percentage of Purchases vs Refis

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I read yesterday that Rocket (parent company of Quicken) did not disclose its percentage of purchases (relative to refis) in its earnings release for Q3. I found that fascinating b/c it was probably intentional and it speaks to what I have been alluding to all year – with so many mortgage companies going public or […]Read More

JVM Is A “Direct Lender” – Does It Matter?

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A few weeks ago, we had an appraisal come in under contract price for the usual reason – the total absence of bracketing comparable sales in a very hot market. Despite the lack of comps, the borrowers were upset with JVM and wanted to take their loan to another loan officer who had explained that […]Read More

2021 Conforming Loan Limits Increase

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The U.S. Median Home Price has increased over 15% year over year – so it is no surprise that the Federal Housing Financing Agency (FHFA) has increased the Conforming Loan Limits significantly for 2021. Conforming loan limits refer to the maximum loan amounts that Fannie Mae and Freddie Mac will allow for financing for one, […]Read More

Loan Servicing & Why It Matters

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A frustratingly common complaint from borrowers has to do with loan servicing. It is so frustrating because we often have so little control over the process. LOAN SERVICING Per Investopedia, loan servicing includes sending monthly payment statements, collecting monthly payments, maintaining records of payments and balances, collecting and paying taxes and insurance (and managing escrow […]Read More

Beware Of Fake Vendors Pretending To Be Us; Paying Off HELOC = Cash Out

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BEWARE OF VENDORS IMPERSONATING LENDERS This is a quick reminder that some vendors, particularly sellers of “mortgage protection insurance” or other insurance products, often reach out to new homebuyers shortly after close. These vendors often see the name of the funding mortgage bank on county records and then reach out to homebuyers, pretending to be […]Read More

JVM’s Relationship With Its Mortgage Bank

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We were getting recruited last fall by America’s third-largest mortgage bank. B/c of our size and unique model, the CEO showed up to review our entire tech stack, our Salesforce buildout, our org chart, our marketing plan and collateral, our website, our sales organization, our ops structure, our training program, our HR policies, and our […]Read More

Why Hiring Recent College Grads In The Digital Age Is SO Necessary And Valuable

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We have a large “Technology Committee” that meets every Friday to review and discuss all of our tech issues, opportunities, and solutions.  During last Friday’s meeting, two of our newer team members went on at length about some new thingies they were looking at that would not only improve many of our old thingies but […]Read More

Big Lender vs. Small Lender – Which Is Better?

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In July, we aligned with a new, much larger mortgage bank that has the resources to hire a lot more operations staff (underwriters, doc drawers, funders) – and our turn-times and service levels are improving significantly as a result. So much so that we will be re-introducing our 14-Day Close within the next 30 days […]Read More

HUGE News In The Mortgage World! Nobody Outside Of Mortgages Noticed… Why?

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This was a front-page story in the WSJ yesterday: United Wholesale Mortgage Goes Public. United Wholesale’s (UWM’s) valuation was $16 billion and they will get a cash infusion of over $900 million. WHY NOBODY NOTICED Very few people outside of the mortgage world took notice b/c UWM is primarily a “Wholesale Lender.” This means that […]Read More

“You Have All The Documents, Now Fund The Loan!” Closing Process Misconceptions

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We had a particularly tough transaction in July when a final records check found a foreclosure (not on the credit report) that had only been seasoned for 6.5 years instead of the required 7 years. This made Fannie Mae/Conforming financing impossible, and it forced us to restructure the loan – which delayed the transaction. We […]Read More

Mark Cuban Was Right; SF’s Death & Revival; IKEA & Honey Badgers

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A few weeks ago I blogged about The Death of New York City, citing another blog by James Altucher that set out reasons why NYC is not going to recover: the loss of business opportunities; the loss of cultural events; and the loss of restaurants. I also mentioned how Dallas Mavericks owner and Shark Tank […]Read More

Will Prepayment Penalties Return?

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A young couple was sitting in my office crying. It was around 2005, they were on a very tight budget, their rate had just adjusted to almost 10%, they had to refinance in a hurry for a variety of serious personal reasons, and they had just discovered that their loan officer had saddled them with […]Read More

Divorces Surge During COVID; Divorce Considerations That Affect Real Estate And Mortgages

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FIRE CERTIFICATIONS NOTE: With wildfires still raging across California, underwriters are still requiring “Fire Certifications” for every property that is near a major fire. This is simply photo evidence that a property remains undamaged by fires. DIVORCES Divorces are surging as a result of the COVID crisis. Online inquiries have jumped over 30%, according to […]Read More

Pay Cash For House Now & Get Financing After Close; “Delayed Financing”

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Despite the COVID crisis, there seems to be more cash-rich buyers than ever right now in our three biggest markets – Bay Area, Austin, TX, and Dallas, TX. This is a result of several things, including the thriving tech economies of Austin and the Bay Area; the prevalence of cash-rich Californians taking their home equity […]Read More

“1% Closing Cost Credit Referral” How’s It Work? Compliant? No Free Lunch

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One of America’s largest mortgage banks is offering a “1% closing cost credit referral” to real estate agents. The below paragraph was copied directly from an email that the lender sent to an agent we know: “I’ve attached your exclusive 1% closing cost credit referral. In order to reserve that for your new buyers you […]Read More

Fed: “We’ll Ignore Inflation & Keep Rates Low Forever!” Or Not

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Media outlets are abuzz with news about The Fed’s new commitment to keep rates low pretty much forever and to also change its inflation targets. This WSJ article is just one of many I saw today discussing this. So what does this mean? The Fed will no longer give credence to what is called the […]Read More

Property Must Have Kitchen Even If It Will Be Gutted Right After Close

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One of our clients is buying an investment fourplex in Texas. He intends to completely gut and rehab all four units as soon as we close. The problem is that one of the units has no kitchen b/c the tenant is using the entire unit for storage. As a result, the appraiser cannot give any […]Read More

Fannie/Freddie Yank Their 1/2 Point Refi Fee

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On Saturday night my wife Heejin and I had a wonderful date at an outdoor Italian restaurant. The food and weather were perfect, and the ambiance was even better with overhead string lights, friendly passersby, and a saxophone player in the background. The only problem was that there were too few customers, and we would […]Read More

Fires, Hurricanes, Appraisals & Delays; Agent Resource Guide

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In Friday’s Blog, I mentioned how we were losing Appraisal or Property Inspection Waivers (PIWs) b/c of the fires in NorCal, but I made an error. Underwriters are not always requiring full appraisals in lieu of PIWs in fire areas; in most cases they are just requiring simple inspections, with no value attributed, that certify […]Read More

No Appraisal Waivers In Fire Areas; Pest Reports Must Be Under 90 Days Old; Pre-Approvals Can Take 3+ Hours

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Here are a few quick updates/reminders. APPRAISAL WAIVERS – NO MAS IN “FIRE AREAS” (Re-inspections too) We have been getting far more appraisal or property inspection waivers (PIWs) over the last few months b/c Fannie, Freddie and lenders in general have relaxed their appraisal standards b/c of COVID and b/c more and more past appraisals […]Read More

Why COVID-19 Is Not Hitting Housing Prices

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A few weeks ago, I blogged about why we are not seeing more foreclosures despite our severe recession and a huge number of delinquent borrowers. The reasons include: (1) borrowers have more equity and won’t abandon it; (2) lending guidelines have been much stronger since 2008; and (3) the housing market is on fire, making […]Read More

Economies Of Scale; Competing In A Post-Boom World

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Last Friday, I blogged about how Ford Motor Company dominated the auto industry in the 1910s by cutting costs so much that they could sell cars for less than 1/4 as much as competitors could. I pointed out how this was likely to happen in the real estate and mortgage industries too at some point, […]Read More

90-Day Mortgage Delinquencies Hit Record Highs; Why No Foreclosures?

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Almost 2 million homeowners were 90 days late with their mortgages in June, according to this National Mortgage News article. But at the same time, actual foreclosure inventory was down significantly year over year. The obvious reason behind the very low foreclosure rates, despite our economic woes, is the COVID-19-related foreclosure moratorium and the related […]Read More

Car Industry Vs. Mortgage Industry; Consolidation Coming? We Want To Be Ford In 1913

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At the turn of the 20th century, there were almost 100 different car companies operating in Detroit alone. But by the 1920s, there were basically three companies – Ford, General Motors and Chrysler – according to this Wikipedia article. What does this have to do with mortgages and real estate? A lot, b/c at some […]Read More

Housing Market – Not All Rosy; Bumps & Volatility

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TOO OPTIMISTIC ABOUT HOUSING? “Stick to mortgages, Jay!” I touted the strength of the housing market numerous times over the last several months, and both borrowers and agents told me they thought I was too optimistic in light of all the pandemic news. One borrower told me to “stick to mortgages and leave the economic […]Read More

Confusing Luck With Talent; Ego Is The Enemy

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There was a big hubbub earlier in the week over a defamation lawsuit involving a mortgage trade group CEO and a prominent mortgage industry executive. The executive and his wife sued the trade group’s CEO for defamation after he made some very inappropriate comments, and the story quickly made its rounds across the industry. You […]Read More

Quicken’s IPO – So Much To Learn; Reason To Be Leery

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Rates edged lower again, so now instead of being really, really, really low, they’re really, really, really, really (4 really’s) low. It remains to be seen if we’ll hit “5 really’s.” BOOMS, PLATITUDES AND BUSTS Over the years, we have seen numerous mortgage banks massively expand during refi booms, and then wildly and loudly celebrate […]Read More

The High Cost of “Cash Out;” Delayed “Hot Season”

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DEFERRED DEMAND/PEAK HOMEBUYING SEASON IS NOW CNBC reported that “mortgage applications to purchase a home rose 5% for the week and were a remarkable 33% higher than a year ago.” America’s average home price also hit an all-time record high of $365,700, as buyers are now out in droves. This all corroborates what many of […]Read More

JVM Aligns With New Mortgage Bank; The Need For Speed & Jumbo!

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We recently aligned with a new mortgage bank for three reasons: (1) to drastically shorten our closing periods; (2) to offer even lower rates; and (3) to access much better jumbo options. We have nothing against our former mortgage bank at all, as we simply were not a good fit for their model and we […]Read More

“The Next Housing Boom Is Closer Than You Think”

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The title of this blog is taken directly from this blog by Stansberry Research. I have hit the topic of a strong housing market numerous times in recent months but am hitting it again for several reasons: (1) Stansberry Research normally touts stocks, so when they shift to touting housing it means something; (2) some […]Read More

“Stips;” Loan Salability; Facing Huge Losses; And Why A Competitor Went To Bat For Us

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What is the scariest thing on the planet? For mortgage banks, it is an unsalable loan. Mortgage banks literally borrow money to fund mortgage loans – using what is called a “warehouse line.” Mortgage banks only make money if and when they sell those loans that are “sitting” on their warehouse lines. For example, when […]Read More

Refinancing After Forbearance; Credit Inquiries

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Over 4 million borrowers went into mortgage payment “forbearance” during the COVID-19 crisis, and many are now starting to end their forbearance periods – and wondering if they can refinance. Here are some of the guidelines. AUTHORIZED FORBEARANCE – PAST BALANCES PAID If borrowers with a formally authorized (by their servicer) forbearance formally end their […]Read More

Purchase Applications Hit 11 Year High; Refis = 63% of Volume

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The Mortgage Bankers Association surveys multiple mortgage banks every week and then releases all of the data. The most recent survey, discussed in this National Mortgage News article, is particularly interesting. Here is just some of the data: Purchase applications are at an 11 year high. Refi applications are 106% higher than last year at […]Read More

Interest Only Loans Vs. Fully Amortized Loans

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Borrowers often ask for “Interest Only” (IO) loans b/c they want lower mortgage payments, and we discourage them for a variety of reasons. I am discussing the pros and cons today. REASONS TO WANT AN IO LOAN: Payment Flexibility: Borrowers with cyclical income want lower payments during slower times (assuming payments really are lower – […]Read More

In Defense of Cities & Large Offices

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I once had a client who was a commercial airline pilot living in San Francisco. As a pilot, he could live anywhere in the U.S., so he decided to sell and use his equity “to pay cash for paradise” in Tennessee. He lasted two years. He moved back, at an enormous cost, b/c he missed […]Read More

Buyer or Seller: Who Pays Real Estate Commissions?

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How are real estate commissions set and who is responsible for paying them? We find these are common questions among both buyers and sellers. Who Pays Real Estate Agent Fees? Here’s the short answer: In California and Texas, as in most states across the country, the seller is typically responsible for both the selling agent’s […]Read More

Yoga Babble & Pizzas Under Cost – Heading Our Way Soon!

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A prominent mortgage bank posted this employment ad last week in a very popular mortgage blog: The company culture at ****** Mortgage is a direct reflection of the lender’s vision to Inspire Hope, Deliver Dreams, and Build Prosperity. I laughed when I read that b/c I am pretty sure the company really just originates and […]Read More

Home Values – This Ain’t 2008! WHY? Inventory and Demographics

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I was interviewed yesterday by a prominent financial reporter who is, for obvious reasons, mired in the very “news” I suggested avoiding in my Wednesday Blog. B/c she is so caught up in all of the negative news, she seems convinced that the housing market could easily see a repeat of 2008 when values dropped […]Read More

“Non-Bank” Mortgage Lenders vs. Banks; Who Are The Players? Why It Matters

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Most Americans have never heard of PennyMac, United Wholesale Mortgage, loanDepot, and Freedom Mortgage. These are just a few of the huge “non-bank” mortgage lenders that funded almost 60% of all mortgages last year. The only “non-bank” player that most Americans have heard of is Quicken Loans, and that is b/c of its massive amount […]Read More

Obtaining Mortgage Financing After A Forbearance

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RULES FOR QUALIFYING POST-FORBEARANCE With millions of future borrowers in either mortgage or rental forbearance, many people are wondering how forbearances will impact a borrower’s ability to qualify for mortgage financing down the road (when they are out of forbearance). Credit: The jury is still out on this, as borrowers with authorized forbearances were not […]Read More

HELOCs Fading; Jumbo Rates Way Higher; FAQs

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Two of the nation’s largest banks announced that they will no longer originate new Home Equity Lines of Credit (HELOCs). This is of course in response to the COVID-19 crisis. We still offer HELOCs but only to 90% Combined Loan to Value (95% CLTV no longer exists) and only for purchase money financing. In Texas, […]Read More

Mortgage Banks Don’t Make Enough Money for Introlend/Referral Fees

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DONUT SHOPS ARE LIKE MORTGAGE BANKS Years ago, I helped a couple that owned a donut shop refinance – and I was shocked by how thin their margins were; they were working 75 hours per week and making very little money. BUT, if I had offered to somehow refer them 50% more customers in exchange […]Read More