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

Richest Man in Germany Got Rich FROM INFLATION; You Can Too!

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A LOAF OF BREAD COST $200 BILLION! A loaf of bread in Berlin that cost around 160 deutschmarks (the German currency unit at the time) at the end of 1922 cost 200 Billion (with a “B”) deutschmarks by late 1923. By November 1923, one US dollar was worth 4,210,500,000,000 deutschmarks. Prior to the German hyperinflation, […]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 an […]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

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

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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

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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 because of my model and the volume discounts I […]Read More

Nordstrom, Walmart, Or Both?; Millennials Demand Both

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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

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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. Because 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

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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?

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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

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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