Good News! Recession Coming Soon; Rates Continue to Fall After Fed Raises “The Rate”

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A week ago, I pointed out how the recent 0.75% increase in the Fed Funds rate resulted in LOWER long-term rates. I highlighted three reasons for this: (1) The markets perceived the news as effective inflation fighting; (2) the markets expected the news and had priced it in already; and (3) the Fed Funds rate […]Read More

No Building + Growing Population = Strong Housing Market EVEN IF RATES ARE AT 6%!

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There were about 2.3 million new homes constructed in 1973 – a number we have not seen since. This is not that big of a deal until you remember that the entire population of the U.S. was only about 211 million (compared to 332 million now). Over the last year, we have built about 1.3 million homes, when, again, the U.S. population was over 330 million!Read More

High Rates; Softer Market; ARMs; Housing Shortages; Recessions; Refis

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Highest Mortgage Rates Since 2009 Last week’s sky-high inflation numbers have pushed 10-Year Treasury rates to levels we have not seen since 2018. While mortgage rates are at levels we have not seen since 2009. Beating A Dead Horse – Again The fast-climbing rates and media rumblings continue to spook buyers – so I am […]Read More

Why We’re Seeing Fraud Claims Now & Will See A Lot More

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I knew and worked with a bunch of hard money lenders (who loaned money based strictly on equity) prior to the 2008 meltdown. Even though they were a bit cocky with their success and they lived like rockstars, they were all nice and honest guys for the most part. They solicited pools of funds from friends, family members, and outside investors – and then loaned out that money to homeowners and homebuyers who could not qualify for better financing.Read More

What Every Homebuyer Must Know About Hazard Insurance & Mortgages

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Here are a few tidbits about Hazard Insurance, something that is required with every mortgage. Hazard insurance is also known as fire insurance and homeowners insurance, and it should not be confused with mortgage insurance, which only covers the mortgage and not the dwelling. Lenders require the “Dwelling Coverage” to match or exceed the lower of the loan amount, or the replacement cost estimate.Read More

Media Lies About Housing Market; Slower Market ≠ Depreciation

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Agents are telling me that some of their clients are getting cold feet about buying right now for a variety of reasons, including: 1) Concerns about higher rates and payments; 2) Concerns about depleted investment accounts; 3) Concerns about an overheated housing market; and 4) Misleading media reports that are scaring the heck out of everyone!Read More

What If Rates Don’t Fall? WRAP-AROUND MORTGAGES

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“… I remember my first mortgage back in 1982, when my rate was 15%!” said every boomer ever… “… I remember my first mortgage back in 1982, when my rate was 10%!” said my law school professor… The above two comments are huge reminders that homes still sell in even the highest of interest rate […]Read More

California Giving Away Down Payment Funds For Free!

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We have received a ton of questions recently regarding the California Housing Finance Agency's (CalHFA) new program that offers a 10%, forgivable, interest-free loan to first-time homebuyers. So, we want to clarify the program's guidelines and touch on some serious tradeoffs buyers should consider.Read More

Pyramid Lending = Death of Mortgage Banks

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During boom times, when there is excess business and margins are fat, “pyramid lending” can work. But – when business slows and margins compress like what has been happening this year – pyramid lending not only does not work, it will kill off many mortgage banks. This is because borrowers can shop for rates and apply for loans more easily than ever nowRead More

Who’s To Blame For High Gas Prices & Why It Matters?

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There are 150,000 gas stations in America, and most of them are independent “mom and pop” stations. Similarly, there are 9,000 oil companies in America. So – it is comical to hear politicians accuse the oil and gas industry of “colluding” to create higher gas prices – when it would be impossible. Gas prices are […]Read More

Why Heejin & I Turned Down $10 Million

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We know a loan officer with a large team who does about half of JVM’s volume – and he was offered a $6 million “signing bonus” to move to another mortgage bank. He turned it down, however, and remained where he was (I will explain why below). With higher rates and refis all but dead, […]Read More

#1 Reason Fintech Firms Fail In The Mortgage Space

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Mortgage Industry Is Reeling With mortgage rates 2% higher than where they were in 2021, much of the mortgage industry is struggling for survival now that refis are all but dead. Many mortgage companies relied so heavily on refis that they are all but out of business now. But – the companies that always seem […]Read More

Cold Feet In The Face of Uncertainty (Take The Money & Run)

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In the early months after COVID hit in 2020, I wrote numerous blogs about the strong likelihood of the economy and the housing market bouncing back. My reasoning was based on strong demographic demand, a shortage of inventory, the press’s propensity to make crises seem worse than they are, and America’s overall resilience in general (as we had bounced back from many other crises amazingly fast).Read More

Watching A Company Implode; Ego, Hubris, INABILITY TO LISTEN OR ADJUST

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“As if things couldn’t get more ridiculous at the online mortgage lender Better Mortgage, where 900 people were laid off over a Zoom call this past December, the company reportedly issued another wave of layoffs by inadvertently notifying employees via its payroll app.” This is a quote from The Verge in an article posted yesterday. […]Read More

Cryptocurrency & Mortgage Financing – Things To Be Aware Of

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We recently had a borrower liquidate funds after a flurry of trades – resulting in demands for YEARS of bank statements by the underwriter (because she’s required to “source” every dollar that goes into a transaction)Read More

Why Russia/Ukraine War Drums Impact Mortgages & Real Estate So Much!

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Interest rates were trending upward before news surfaced that NATO believes Russia is still likely to invade Ukraine (because so many Russian troops are amassed at the border). When the news surfaced, rates dropped sharply in response.Read More

Why The NASDAQ Impacts Homebuying So Much

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After the 2008 meltdown, a borrower told me how sad she and her husband were because they lost $250,000. They bought their home in the 1990s for $300,000 and watched it appreciate to $1 million by 2006ish. Interestingly, they pulled cash out every 18 months to buy boats, jet skis, new cars, and vacations.Read More

Fed Comments Push Rates Up; Re-Casting Problems!

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Interest rates shot up again yesterday, as the Fed indicated that it may increase the Fed Funds rate faster (as much as 1% this year) than previously anticipated. The Fed also implied that it would stop buying mortgages and bonds (via “Quantitative Easing”) which would put further upward pressure on rates. Read More

5 Misleading Rate Quote Tricks To Watch Out For!

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This is a surprisingly common occurrence: A buyer comes to us with a ridiculously low rate quote from another lender and insists that we match it. We then ask to see the Loan Estimate (LE) that sets out all the fees. And – invariably, we find $10,000 of points or origination fees buried in the loan. The confused buyer, however, thought she was getting a “no cost” loan. Read More

China’s Massive Housing Bubble? Will It Affect Us?

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160 Million Units For Sale In China (vs. 3 Million In The U.S.) China has somewhere between 55 to 65 million unoccupied properties, depending on the source, and an additional 93 million units under construction. Famous financier, Hugh Hendry, was on this Rebel Capitalist Podcast in December discussing China’s extremely precarious property market – and […]Read More

Are “No Doc” Loans Back? Misleading Lender Games

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GIVE ‘EM THE OLD RAZZLE DAZZLE! I have an acquaintance who heavily touts his down payment assistance programs in order to lure in first-time buyers – only to then aggressively push those buyers into FHA loans with high rates (and high profits for my acquaintance). My acquaintance says: “down payment assistance loans don’t work for […]Read More

Insanely WRONG Predictions! More Coming Soon; Please Ignore Them :)

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CoreLogic predicted home prices would decline by 6.6% in 2021 – and they were off a little. Home prices appreciated by almost 20% in 2021! What makes this enormous error so fascinating is the fact that CoreLogic is considered to be the granddaddy of data collection and analytics when it comes to the housing market. […]Read More

Fed Announces 3 Rate Hikes… And Rates Dropped! WHY?

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The Fed sent the markets into a tizzy recently, finally admitting that inflation is now a serious problem and that there would likely be as many as THREE RATE HIKES in 2022. The bond and mortgage-backed securities (MBS) markets reacted negatively, and every lender announced a series of mortgage interest rate increases as a result. […]Read More

5 Reasons Why The New FHA Loan Limits Will DESTROY Our Economy!

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A first-time homebuyer can now buy a $1 million home with only 3.5% down! This is because the FHA just released its new loan limits for 2022: (1) Low Balance Limit (for most of Texas): $420,680; (2) High Balance Limit (for most of coastal California): $970,800. This is great news for many buyers with limited […]Read More

2022 Conforming Loan Limits Announced – Up By $100,000; Good or Bad?

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As we all learned on TikTok recently, the FHFA announced the new Conforming Loan Limits for Fannie Mae and Freddie Mac. I mention TikTok because that is where one of our superb marketing managers heard about it – and that was a reminder to me that TikTok isn’t only about bad dancing and lip-syncing. 😊 […]Read More

Why We Don’t Align With UWM/Broker Channel

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MOST INNOVATIVE COMPANY IN MORTGAGE One of the most innovative companies in the mortgage space is also the largest wholesale lender. As a reminder, there are Three Primary Channels For Mortgages: (1) Banks & Credit Unions; (2) Mortgage Banks; and (3) Brokers. Banks perform many other functions (checking, savings, commercial lending) besides offering mortgages; mortgage […]Read More

How Monkeys Close Loans in 10 Days; Purchases? Not So Much…

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30-MINUTE LOANS Closing a conforming (Fannie/Freddie) refinance for a W2’d employee with good credit can take less than 30 minutes of effort on the part of a lender. This is because lenders can now use artificial intelligence to underwrite clean files, and verifications of employment and assets are pulled automatically via the lender’s loan application […]Read More

Qualifying For Mortgages With Assets Only – No Income Necessary

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WHOM ARE ASSET BASED LOANS GOOD FOR? Asset based loans are perfect for two types of borrowers: (1) wealthy borrowers with very complex financial pictures that would make qualifying in the traditional manner a nightmare; and (2) borrowers with ample assets but too little income to qualify. HOW DO ASSET BASED LOANS WORK? INCOME: Income […]Read More

No Income Verification Loans: DSCR

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I’ve mentioned this “horror story” a few times in my blogs. In 2005, I was at a Christmas party where a wholesale rep from SunTrust Bank was bragging about his “no down payment” (100% LTV) “NINA” Loans for investors. NINA stood for “No Income/No Asset” verification. Borrowers only needed a 680-credit-score and they could buy […]Read More

Our Massive Jumbo Niche & How It Benefits You!

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The median home value in many of our core markets is well in excess of $1 million! As a result – we were FORCED to become “Jumbo Financing Experts” because conforming (Fannie/Freddie) loans in coastal California are about as rare as California Condors. And – IT WAS PAINFUL! It was painful because every jumbo investor […]Read More

What Happened to ALL Those Borrowers in “Forbearance?”

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There were approximately 4.5 million mortgages in forbearance when the number peaked during the COVID crisis in 2020. This scared the bejeebers out of a lot of market-watchers, as they feared it portended another massive foreclosure crisis (like we saw after the 2008 meltdown, which collapsed the market). BUT – not so much. WHAT IS […]Read More

The 6 Forces Driving Interest Rates

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  THE THREE FORCES DRIVING RATES The mortgage industry’s primary voice/blogger, Rob Chrisman, recently wrote this: “There are three forces driving mortgage rates these days: uncertainty about the effects of the pandemic drives money to the safety of fixed income securities (mortgage bonds) moving rates lower; inflation fear backed by data moves rates higher, and […]Read More

Conforming Loan Limit Up to $625,000? Jumping the Gun and Why It Matters

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HIGHER CONFORMING LOAN LIMITS ANNOUNCED EVERY YEAR Every year, usually in late November, the Federal Housing Finance Agency (FHFA) announces the new conforming loan limits for every geographic area for the following calendar year. Shortly thereafter most every mortgage lender follows suit and starts to offer higher conforming loan amounts as well. Two quick reminders: […]Read More

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

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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

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

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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

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

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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

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

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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

Missed Rent Payments Are OK – Or Are They?

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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

Rent Payments & Rental Income To Qualify

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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

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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 because he was playing golf at Pebble Beach with a […]Read More

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

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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

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

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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

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

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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

Closing Fast! What Are The Hold-ups? Different Speeds For Different Loan Types

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FURIOUS AGENT SCREAMS AT ME A furious agent called me a few months ago, screaming vitriol because we were closing his transaction one day late. He was livid because we promised we could close in 14 days, and the late closing was causing “enormous hardship for both the buyers and sellers.” The problem was that […]Read More

The One Thing That Can CRASH The Housing Market!

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I have repeatedly blogged about reasons why we are not in a housing bubble: Demographics & Demand: Homebuying demographics are peaking, as a surge of millennials is just now hitting peak homebuying age (early 30s). This is in sharp contrast to the 2008 housing meltdown when homebuying demographics hit all-time lows. Supply Issues: (A) Builders […]Read More

Do Some Loans And Lenders Require More Work From Borrowers?

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MASSIVE TECH SPEND – FOR BORROWERS We spend about $750,000 per year on various technology applications with the primary goal of making the mortgage process as simple and as efficient as possible for our clients. This technology includes our point of sale/application system (Blend), our elaborate CRM buildout (Salesforce), our electronic document reading systems (Candor, […]Read More