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

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

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

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

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

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

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

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

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

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

FURIOUS AGENT SCREAMS AT ME A furious agent called me a few months ago, screaming vitriol b/c we were closing his transaction one day late. He was livid b/c 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!

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?

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

4 Must-Know Facts About INFLATION, Housing, And Mortgages

INFLATION, HOUSING & MORTGAGES With inflation here and only expected to get worse, many potential buyers are getting nervous and wondering what to do. As a result, I thought I’d address a few major considerations today. 1. HOUSING IS AN INFLATION HEDGE/PROTECTION AGAINST INFLATION As a hard asset, housing tends to appreciate with inflation like […]Read More

Why Loan Officers Don’t Use Their Own Company For Financing; No Loan Officer Models

OTHER LOAN OFFICERS CAME TO ME FOR MORTGAGES Prior to the 2008 Mortgage Meltdown, ironically, a major source of business was other loan officers coming to me for mortgage financing. They came to me back then for several reasons: 1) My rates were lower than theirs b/c of my model and the volume discounts I […]Read More

Nordstrom, Walmart, Or Both?; Millennials Demand Both

I was at a coaching event last year listening to an extremely successful loan officer, with a huge team, explaining how he maintains strong client relationships by offering much more than just mortgage services, e.g., moving services; contractor referrals; financial analyses; rate monitoring; house valuation and equity updates; etc. It resonated b/c we of course […]Read More

Jumbo Lending Explained – How We Target Jumbo “Investors” For Every Borrower

We had an appraisal come in low last week, and the agents seemed to believe that our choice of “jumbo investor” (PenFed) had something to do with the low appraisal when that was not the case. B/c the agents were smart and very seasoned, it occurred to me that I should explain the nature of […]Read More

Why A Giant Stuck Ship (Suez Canal) Impacts Mortgages & Real Estate

YouTube gets me – and thank goodness for that b/c it sends me entertaining videos all day long, every day! This is why I know that Komodo dragons eat deer alive (Komodo saliva paralyzes the deer), why I know about the mating habits of cicadas (they only live a few weeks and come out every […]Read More

5 Major COVID Effects After One Year; Way Hotter Housing Market – WHY?

It was one year ago this month that the World Health Organization declared that the “Coronavirus” (old-fashioned name for COVID) was a “pandemic.” And holy smokes has the world changed (understatement of the year). Here are some of COVID’s major effects on the Real Estate and Mortgage Industries: 1. INTEREST RATES Even though rates have […]Read More

2021 Predictions: Rates, Inflation, Housing & Affordability

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

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

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

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?

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

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?

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

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

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?

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

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

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

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

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

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?

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?

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

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

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?

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

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”

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

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

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

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

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

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

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

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

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