Posts

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

Conforming Loan Limits In California 2021

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

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

Fannie Mae Re-Slams Mortgage Industry With 1/2 Point Refi Fee

In August, I blogged about Fannie Mae Slamming Refi Borrowers With A New 1/2 Point Fee. And then later in August, I blogged about Fannie Mae Yanking Its 1/2 Point Fee In Response to Industry Pressure. But, Fannie only postponed its refi fee until December 1st. So all refinance loans sold to Fannie Mae and/or […]Read More

When 1.99% Is A Bad Deal; Why Rates May Not Fall Further

1.99% – YAY!!!! OR NOT…. (LOOK AT THE FEES) Several lenders were touting their 1.99% interest rates recently, and we were getting emails from agents and borrowers alike asking about the “amazing rates.” But, that rate is not amazing when you look at the fine print, and almost all lenders, including JVM, can offer it […]Read More

Fannie & Freddie Breaking Off From Government Control?

INTEREST RATES COULD SHOOT UP AT ANYTIME We often remind both borrowers and agents that interest rates are generally expected to remain low for some time, but that does not mean they cannot shoot up unexpectedly. Our point is that both buyers and current mortgage holders should take advantage of today’s low rates now before […]Read More

I Caught My Dog Issuing Pre-Approvals (True Story)

I made the horrible mistake of teaching my dog Kevin how to run Fannie Mae’s automated loan approval software, known as Desktop Underwriter or “DU.” It was easy to teach him b/c all he has to do is gather info from borrowers and input data. BUT, THIS is why it was a huge mistake! Without […]Read More

Higher Rates Won’t Hurt Housing Prices Per Fannie Mae Economist

Several Realtors have asked us recently about the effect of higher rates on housing prices. This is b/c their own clients are concerned about buying now and risking a decline in values. According to Fannie Mae’s Chief Economist, Doug Duncan, rate increases usually do not portend a decrease in values for several reasons. 1. If […]Read More

5% Down Conventional Condo Purchase up to $625,500; Owner Occ. Ratio; Lender Credit for Closing Costs

This is another reminder that Fannie Mae now offers 95% Loan-Value-Financing for High Balance loans up to $625,500 (we alluded to this yesterday too). This is especially important for the many condo buyers with limited cash. Most condo complexes are not FHA approved, so most higher-end condos were off limits to buyers with limited cash. […]Read More

Fannie, Freddie, Agencies, GSE’s; What Are They? Differences?

Fannie Mae and Freddie Mac are Government Sponsored Enterprises (GSEs) or “Agencies” that buy loans from mortgage banks and either hold them in their portfolios, or package them into “Mortgage Backed Securities.” They were created by Congress as ostensibly private companies to provide liquidity to the mortgage market. They are now effectively controlled by the […]Read More

Fannie’s HomePath Financing Died In 2014, and Nobody Noticed

Fannie Mae offered special financing for its REO properties via its Homepath program for about five years. It came out with big fanfare in 2009 b/c it offered special financing with only 5% down, no PMI, etc. Few of our borrowers ever opted to pursue Homepath financing, however, b/c the rates were so high. Homepath […]Read More

Jan. 26: Big Day – FHA MI Drops; CU Appraisal Rule In Effect

January 26th, 2015 is a big day in the mortgage industry. 1. FHA “monthly” MI is lower (down to 0.85% for most loans) for all case numbers ordered from today on. Per HUD, expect delays in getting case numbers. 2. Fannie’s much feared new Collateral Underwriting (CU) Rule is now in effect. This is a […]Read More

3% Down for Condos; Don’t Need FHA Approval for Condos!

Fannie Mae’s new 97% loan will finance condos! This is huge b/c in the past Fannie would only go to 95%. This means that condo complexes no longer need to be FHA approved for low-money-down financing (for loan amounts up to $417,000). Fannie actually is better than FHA b/c the down payment requirement is less […]Read More

Rental Income = 75% of Gross Rent (Again)

For years, Fannie Mae and most lenders allowed borrowers to use 75% of the actual rent on a lease agreement for “qualifying income” (as long as the rent did not significantly exceed market rates). After the 2008 meltdown, Fannie tightened up and correlated only to the income reported on a Schedule E on a tax […]Read More

Fannie and Freddie Are Not the Same; “GSEs.”

Fannie Mae and Freddie Mac are Government Sponsored Enterprises (“GSEs”). Their role is to securitize mortgages or to help bundle them up to sell on the secondary market. This role effectively keeps interest rates lower. “Conforming” or “Conventional” loans up to $625,500 are underwritten to Fannie’s and Freddie’s guidelines. Fannie Mae and Freddie Mac offer […]Read More

95% & 90% of FUTURE VALUE Construction/Rehab Loans

Fannie Mae now offers Construction Loans up to 95% of the future value (after improvements) of a property for low balance loans of $417,000 or less. For high balance loans (to $625,500), the maximum loan-to-value is 90%. These are straight construction loans underwritten to Fannie Mae “rate and term” guidelines. They allow for most any […]Read More

100% “Gift Funds” OK for Conventional Now

FHA allows 100% of a down payment to be from “gift funds” from a relative (parent, sibling, aunt, uncle, etc.). Fannie Mae (conventional lending) used to only allow 100% gift funds if the down payment was equal to 20% or more of the purchase price. If a down payment was less than 20%, at least […]Read More

FHA Loan Limits Drop; 4 Unit Limit Is $1.2MM

Fannie Mae and Freddie Mac (conforming) loan limits will remain the same in 2014. FHA, however, will have lower limits in 2014. The table below sets out new limits. Note that most Bay Area counties and Orange and Los Angeles Counties have the maximum loan limit of $625,500 for a single family residence. Many outlying […]Read More

Maximum Loan-to-Value Ratios: 80%; 90%; 95%; 96.5%

Fannie Mae no longer allows 97% loan-to-value financing, making FHA that much more necessary for borrowers with limited funds. Below are the maximum loan-to-value ratios for various loan-types. Conforming Low Balance (< $417,000): 95% Conforming High Balance ($417,000 to $625,500): 90% FHA ($417,000 to $729,750): 96.5% Most Jumbo Lenders: 80%* *Many allow 10% 2nds or […]Read More

Conforming Loan Limits to Remain The Same

Fannie and Freddie announced that they will not change conforming loan limits for at least six months, and when they do, they will provide at least six more months of notice. This is very important b/c there were prominent rumors that the conforming loan-limits were going to come down in early 2014. Conforming loan limits […]Read More

“Windows Boarded Up? Can We Finance?” B of A – 83% Refis!

A Listing Agent called us Friday about an offer he received from one of our borrowers (our contact info is prominently displayed on our pre-approval letters so we get Listing Agent calls often). In this case, the Listing Agent was concerned about the fact that the windows were completely boarded up on the 2nd story. […]Read More

No Such Thing As “Streamline” Financing; Borrower/CPA Pushback

Despite ads on the radio saying otherwise, there is no such thing as a “streamline” mortgage financing process. FHA offers streamline refi’s but purchases and all types of conventional and jumbo financing always require “full documentation.” We beat this dead horse often, but we are doing so again because we get so much pushback from […]Read More

Vernacular: Conventional, Conforming, High Balance, Low Balance, Etc.

Here is a brief vernacular review, as some of our clients have been confused lately. Fannie, Freddie, Conforming and Conventional loans are all the same thing. A loan is considered “conforming” if it “conforms” to Fannie and Freddie guidelines. Lenders split “conforming” limits into “Low Balance” and “High Balance” categories. Low Balance loans cap out […]Read More

The “Private” MBS Market Returns – Lower Rates; More Loan Types; Great News for Jumbo Financing

We have been hearing encouraging talk about how the “Private” Mortgage Backed Security Market will resurge in 2013. Private mortgages are those NOT backed by Fannie, Freddie or FHA. This week, a good friend of ours emailed us the following link: http://www.housingwire.com/news/sp-private-label-rmbs-issuance-almost-doubles. This is very good news for lenders, borrowers and Realtors for a couple […]Read More

Irrational and Frustrating Conditions – Today’s Fannie Mae

We had a buyer tell one of our top Realtors yesterday that we are the most ignorant and incompetent buffoons to ever walk the face of the planet. She was utterly convinced that we were looking for a reason to NOT approve her loan. She was livid because we were trying to paper-trail all of […]Read More

Call Extra/Unpermitted Units “Storage”

We have two retired borrowers refinancing their property in Berkeley – a quaint older home with an in-law in back. The in-law unit is a cute little, detached cottage that does not detract from the property in any way, and it also generates $900 per month in rent. The cottage itself is in great condition. […]Read More

Every Penny In Transaction Must Be “Sourced” Up To Close

Borrowers all too often believe that once their loan is approved and they sign loan documents, they have nothing to worry about. We have addressed this before, reminding everyone that “verbal employment verifications” are often performed right before close of escrow (so yes, borrowers do need to keep their jobs through close of escrow). Another […]Read More

We Speak Spanish, Korean, Mandarin; Fannie Not Rational

JVM is multi-lingual. We speak fluent Spanish, Korean and Mandarin. We have a $250,000 loan and a $700,000 appraisal; the loan to value is 35%; the borrower’s credit is perfect and his debt ratios are near single digits. Yet, Fannie Mae is forcing us to pay $140 for an appraisal review because the appraisal came […]Read More

Trying to “Time the Bottom” and Getting Burned

All of our borrowers wish or expect us to “time the bottom” of the market with respect to interest rates. And as a result, they are often reluctant to lock in a rate or are reluctant to get us the necessary paperwork after we do lock. This is because they read accounts in the press […]Read More

Fannie, Freddie, HUD – What’s the Difference?

Well over 90% of all mortgage financing involves Fannie, Freddie and HUD (FHA); meaning that over 90% of mortgages are effectively “government backed”. All of these mortgages must be under-written via guidelines established by those agencies, and many of those guidelines are not always rational. Examples include “explaining” a $1,200 deposit from 3 months ago, […]Read More

Cash Buyers Refinancing After Purchase?

We often have cash buyers who pay all cash for properties for a variety of reasons, including: (1) poor condition precluded mortgage financing; (2) need for a very fast close precluded mortgage financing; (3) offering “all cash” garnered a lower price from a nervous seller; or (4) the property was purchased via a deed of […]Read More

Condo Not FHA Approved? 5% Down Condo Loans

We had a highly qualified FHA buyer yesterday ask if a particular Condo Complex was FHA Approved. It was not FHA approved, but it makes little difference because the buyer can easily put down 5% (only 1.5% more than FHA requires) and garner conventional financing. As long as the resulting loan amount is under $417,000, […]Read More

Risk of Using TWO Lenders; One as “Back Up”

We often have very, very tough loans that seem to “panic” both borrowers and Realtors alike. And, in their panic, they often go to other lenders as a “back-up precaution”. This more often than not screws up our transactions altogether. Example #1: We had a loan last summer in which the selling agent insisted that […]Read More

“It’s Just Not Meant to Be” = Nonsense

In a rare occurrence, both stocks and bonds are off today. Usually when stock prices are up, bond prices are down and rates go up. Conversely, when stock prices go down, bond prices often go up and rates improve (money leaves stocks for bonds). Today, both bonds and stocks suffered because of our government’s inability […]Read More

Financing After Foreclosure, Short Sale, BK – Time Required

Here are the “Seasoning Periods” or “Time Required Periods” after major derogatory credit events. We publish this time and again because they often change and because people ask us about them so frequently. ALL Periods below require FHA financing. The Seasoning Periods for Conventional financing are far longer. Short Sale with No Late Mortgage Payments […]Read More

Fannie Mae’s 3% Down Loan – Alternative to FHA

Fannie Mae has a 3% Down (“conventional”) purchase that is a good alternative to FHA, if FHA is unavailable. Fannie’s program caps out at $417,000, while FHA goes to $729,750, and Fannie’s rates are higher than FHA’s for this program. In addition, the PMI rate for the alternative Fannie Program is 1.15% (the same as […]Read More

Jumbo Market is Back – Good Thing for Many Reasons

We had another lender come by yesterday touting their “hot jumbo” products. This has been a frequent occurrence over the last year. We have Met Life offering portfolio jumbo loans, and about 25 of our mortgage wholesalers offering products from GMAC, B of A/Merrill and even Goldman Sachs now. These are true “Jumbo” loan products, […]Read More

Fannie Mae No Longer Backing High Balance? No Worries

The New York Times had a front page story today entitled “Federal Retreat on Bigger Loans Rattles Housing”. The article mentioned that Fannie and Freddie will no longer back loan amounts up to $729,750 starting this fall. This of course panicked some of our clients, intending to buy or sell in the near future. But, […]Read More

Fannie/Freddie Going Away?; 203K Loans

There is tremendous pressure from pundits and politicians alike to do break ups or at least greatly reduce the size of Fannie and Freddie. This makes many of us nervous in the short run b/c Fannie, Freddie and FHA combined back up over 90% of the overall mortgage market. We say “short run”, however, b/c […]Read More

Over-Concern About REO & Fannie’s Inventory??

Fannie and Freddie are sitting on 241,000 properties on their books (worth about $24 billion). This inventory, combined with bank inventory, continues to frighten potential home-buyers. But, we think the fears are over-blown for several reasons. First, the U.S. economy in a normal growth mode can absorb about 2 million NEW housing units per year. […]Read More

FHA is OK after Short Sale; Trusts, LLC, Corp – Not OK for Fannie

Remember once again that if a Short Selling Borrower stays current with his or her mortgage up to the date of a short sale, that borrower can immediately get FHA financing after the short sale. FHA formerly required two years of seasoning from the short sale; Fannie Mae still does. Sorry to beat this dead […]Read More

Irrational Underwriters – Unforeseen Conditions – Loan Buybacks – Paranoia

We take great pride in our ability to spot issues up front. BUT, unfortunately, we operate in an era of underwriter-paranoia. The reason: Fear of Loan Buybacks. Major investors and Fannie and Freddie all can and do demand “Buybacks”; they can force the lender that originally funded the loan to buy back a loan if […]Read More

4 Options for Investor Financing; Best Time Ever for R.E. Investing?

Another surge of foreclosures is expected to hit the market this fall. And, with rates so low, the opportunities for Real Estate Investors are excellent. Here are 4 Financing Scenarios for a $200,000 Investment Property that would rent for about $1,650 in Eastern Contra Costa County, for example. I. 10% Down, Full Doc, Fannie Mae […]Read More

HOMEPATH Financing; 3% Down Owner and 10% Down Investor Financing with No PMI

For those of you frustrated about the $3 billion “Cash for Clunkers” subsidy for the auto industry, don’t forget that the Fed has set aside over $1 trillion to buy up mortgages. And, when you take into account homebuyer tax credits, interest deductions, and banking bail-outs, the real estate industry, directly and indirectly, is probably […]Read More