Question: What is the perfect loan for a retired mobster? (This is a serious question, and I will explain more below)
Answer: A no-ratio loan.
No-Ratio Loans
All a borrower needs to qualify for a $1 million, 80% loan-to-value loan at 7.0% is about $1.5 million in relatively liquid assets such as savings, stocks, bonds, etc. (note: real estate equity does not count).
That might seem like a lot for many Americans, but after the stock market runup, we see clients like that all the time now.
One of our best “no-ratio” loans, which requires NO income verification of any kind, only requires substantial liquid assets after close.
The assets after close need to equal the loan amount + 60x total monthly debt obligations (including the house payment).
The max LTV is 80%, and the rates are shockingly LOW, and the max loan amount is $3.5 million.
We have many other “no-ratio” or “asset-based” loans that require considerably fewer assets, too, but the rates are higher.
Mobster Loans
In the 1990s, about 50% of my loans were very similar “no-ratio,” asset-based loans because the rates were actually lower than prevailing Fannie Mae rates.
One of my clients was an alleged retired mobster with millions in the bank – who would use no-ratio loans to finance properties because he did not want to share any other information.
I did several loans for him, but never met him in person. I was not allowed to ask questions; I only interacted in person with his intermediaries; and I never saw any documents other than his bank accounts.
I did speak to him on the phone though, and he was great to do business with. Very straightforward. No nonsense. Zero small talk. No haggling.
He was almost as odd as the Russian mobster I also dealt with in that era but had to stop (costing me a Realtor relationship) because he was too shady.
I miss the ‘90s.
Hopefully, we get back to a point where these no-ratio loans beat Fannie Mae’s rates, as it seems like we’re getting very close.
Appraisal Waivers Just Got More Prevalent
Fannie and Freddie recently expanded their appraisal waiver guidelines to include loans that are up to 90% loan-to-value (up from 80% loan-to-value previously).
So, given the enormous number of appraisals now in Fannie’s and Freddie’s databases (a requirement for an appraisal waiver) and the expanded LTVs, expect to see a lot more appraisal waivers in the future.
Shopping for Homes in Extra Slow Fall Markets When Rates Are High
We are getting lots of contracts now that are under list price and seem to be bargains.
While some might suggest that this is a sign of a soft market, I suspect it is more a function of just far less competition (which may be another way of saying it’s just a “soft market” 😊).
In any case, this is something we see every fall and it is why we remind our clients that fall is a great time to shop.
