Private Money In Lieu of Non-QM/Bridge Loans; JVM/Mortgage Bank – Here to Stay; Eating EMDs

PRIVATE MONEY = TEMPORARY SOLUTION Both agents and buyers are reaching out to us to save transactions that have blown up elsewhere b/c both bridge loan and non-QM financing has dried up. Bridge loans are temporary loans against a property that will soon be sold (in most cases), and non-QM loans allow for alternative income […]Read More

1st/2nd Combos Instead of Jumbo; Backup Offers; Temporary Loans; Self-Employed Borrowers

1ST/2ND COMBOS INSTEAD OF JUMBO This is a reminder that 1st/2nd combo financing remains a great alternative to jumbo.  CA 2nd liens are Home Equity Lines of Credit (HELOCS) while Texas 2nd liens are fixed-rate 2nd mortgages; HELOC lenders tie their loans to Prime Rate (3.25% currently); and most accept revised appraisal guidelines (exterior only […]Read More

Jumbo Market Gets Even Tighter as Wells Fargo Pulls Out; Forbearances Again

WELLS FARGO PULLS OUT OF JUMBO MARKET Wells Fargo announced yesterday that it is pulling out of the jumbo mortgage market, sending shock waves through the industry (b/c Wells is such a force). Many other jumbo lenders and investors (that buy jumbo loans) are following suit or tightening up their own internal policies in response […]Read More

Contingency Periods During COVID-19 Crisis; Which Loans Are Safe; Employment Is a Huge Concern

I mentioned yesterday that we are still getting purchase contracts and agents are still making offers, and asking us about contingency periods in light of the COVID-19 crisis. We obviously can’t close in 14 days now b/c of COVID-19-related delays, so below are some contingency/closing periods we are requesting until the crisis ebbs. We do […]Read More

Forbearance Confusion; Refis Dominate Market; Purchases Still; Mortgage Industry Remains Alive

FORBEARANCE CLARITY The mortgage industry, terrified of a mass onslaught of payment forbearances, was alarmed by a misleading report by CNBC. Reporter Diana Olick said that borrowers obtaining a forbearance could tack the missed payments on to the end of the mortgage. This is not true, however, as most servicers will try to recoup the […]Read More

Jumbo Loans Stall; IRS & India Shutdowns Slam Industry; Still Funding Loans; Vanilla Loans Only

STIMULUS AND FED ALMOST CRASHED MORTGAGE/HOUSING INDUSTRY Here is a great article that partially explains what happened. Long story short: many major lenders face bankruptcy b/c servicing values are now close to zero (b/c of the risk of missed payments) and b/c lenders face massive margin calls b/c of the Fed’s bond-buying. STILL FUNDING LOANS/VANILLA […]Read More

FED & Industry Updates; Loans Disappearing; What Agents Should Do; Deferments Not Free Money

THE FED, RATES, & MORTGAGE COMPANIES The Fed has purchased over $250 billion of mortgage-backed securities (MBS) over the last two weeks – an unprecedented record by far. This has pushed MBS yields down significantly for investors in the secondary market, but mortgage rates at the consumer level are still not moving for reasons we […]Read More

Forbearances Explained; ≠ Free Lunch; Mortgage Industry In Panic Mode

The entire Mortgage Industry is in a state of panic right now. This is b/c so many potential borrowers could skip or miss payments, and b/c the Fed is pushing mortgage rates down too quickly and putting enormous financial pressure on mortgage lenders. Mortgage lenders and servicers are both facing enormous losses for a variety […]Read More

3.3 Million Unemployment Claims & Rates UP! Why? Lenders Misleading Borrowers

3.3 million people filed for unemployment last week, shattering the previous record of 700,000 set in 1982. Normally, such news would send rates into a massive downward spiral – but not in today’s world. Rates remain higher primarily b/c of the extra risks involved with mortgages now. These risks are enormous and include job losses […]Read More

Job Losses & Qualifying for Mortgages; Terror In Mortgage Industry

A seasoned agent called me yesterday to ask if her buyer could still close on a transaction even though he had just been laid off (the buyer still wanted to close despite not having a job). My answer was of course “no,” so she then asked when he could get a loan again, prompting today’s […]Read More

Appraisal Relief’s Here, But Limited; Purchase Appraisals Going Well; Interest Rate Updates

Fannie and Freddie released “Appraisal Relief” guidelines yesterday that consisted primarily of waiving interior inspection requirements. They agreed to accept “exterior inspection” and/or “desktop appraisals” in lieu of full, traditional appraisals. But, the relief is turning out to be more limited than we hoped. LIMITATIONS Appraisal relief is only available for conforming (Fannie and Freddie) […]Read More

Fed Rescues Mortgage Market; Mortgage & Appraisal Relief Measures

On Friday, there were three major factors pushing up mortgage rates: (1) too much business – lenders are pushing up rates to stem excess volume; (2) too little liquidity – too few buyers of mortgage-backed securities in the marketplace forced lenders to offer higher yields to attract more buyers; and (3) RISK (a new factor) […]Read More

Liquidity Crisis; Non-QM Shuts Down; Extreme Market Volatility; Higher Rates

LIQUIDITY CRISIS One of the biggest issues facing our economy right now is a massive “liquidity crisis.” In simple terms this means there is far too little cash in our economy. The reasons are many and very complicated, and I list a few below. Investors are selling off assets in mass to avoid losses and […]Read More

Rates Way Up! Liquidity Crisis; Refi Later for Free; Buy Takeout Food :)

INTEREST RATES SHOT UP AGAIN YESTERDAY Rates shot up 1/4 percent yesterday over about a 30 minute period – something we have not seen for years. Rates came back a bit this morning, but then shot up again over the last hour in an extremely volatile market. Rates are now about 3/4 percent higher than […]Read More

COVID-19/Mortgage Industry Update

Here are a few reminders and key updates that are warranted (despite some repetition) b/c the overall situation remains so fluid and b/c we are still getting so many questions. MORTGAGE INDUSTRY REMAINS OPEN Most lenders remain open and fully operational and are still funding and recording loans (with most team members working remotely), as […]Read More

Bay Area Shutdown; COVID-19 Update; Delays; Appraiser Shortage; Rates Not Falling

As everyone in the Bay Area now knows, the entire Bay Area is subject to a mass “Shelter in Place” order by local health authorities in an effort to combat the spread of COVID-19. I won’t go into all of the details here, but it restricts all large gatherings and major events, and only “essential […]Read More

Mortgage Rates Barely Move; Hell Actually Breaks Loose; Fed Cuts Rates to Zero

FED CUTS FED FUNDS RATE TO ZERO; $700 BILLION IN QUANTITATIVE EASING In a shocking and surprise weekend move, the Fed cut the Fed Funds Rate to 0% yesterday – which may or may not have moved mortgage rates for reasons I explain often (cuts in short-term interbank borrowing rates don’t often translate to cuts […]Read More

Stocks Down; Rates Up; DELAYS Caused by Coronavirus and Refi Boom

NORMALLY – WHEN STOCKS FALL, RATES FALL (BUT NOT THIS WEEK) The Dow Jones stock market index peaked at 29,551 only 1 month ago (on Feb 12th). As I type this on March 13th, the index has fallen to 21,362 – a staggering 27% drop. Initially, as everyone knows, mortgage interest rates plummeted along with […]Read More

Rates 1/2 Percent HIGHER Than On Monday; Early Pay-Off Penalties

Mortgage Interest Rates remain a full 1/2% higher than where they were on Monday, and 5/8% higher than where they were last week. So, while the 10-Year Treasury Bond (government debt) remains in record-low territory, mortgage rates are up considerably as the industry tries to stem excess volume. EARLY PAY-OFF PENALTIES – HOLDING ON TO […]Read More

What Happens When Entire World Wants to Refi? RATES WAY UP; Turmoil; Service Way Down

In January and February, interest rates dropped as much as 1/2 percent over the course of a few weeks and the mortgage industry experienced a refinance boom like it has never seen before. The result is now higher rates, confusion, turmoil and utterly inadequate capacity. Lenders are not even close to being able to handle […]Read More

Rates Keep Falling; 15-Year vs. 30-Year Fixed-Rate Mortgages

Rates continue to fall in response to coronavirus concerns. They hit all-time record lows again today, as the entire mortgage industry scrambles to handle the influx of refinances. Don’t take the 15-Year Fixed! Take the 30-Year Fixed – Please! When rates move this low, borrowers often ask if they should opt for a 15-year mortgage […]Read More

Interest Rates Hit Record Low; Closing Cost Tricks Big Banks Play

CLOSING COSTS ARE ALMOST THE SAME FOR ALL LENDERS A buyer said this to me yesterday: “Both of the banks I visited offered to match your rate and give me $4,000 less in closing costs; I only went with you b/c you could close on time and the banks could not…” Both of those banks […]Read More

The Tale of Two Lenders – Who Really Pays the Cost of Co-Marketing?

We were approached last year by an extremely successful leader of a large team of real estate agents – together they close dozens of transactions every MONTH! The leader asked me if we were willing to co-market for online leads to the tune of about $20,000 per month, as that is what his current lender […]Read More

Fed Rate Cuts Don’t Mean Mortgage Rate Cuts

We were asked a variance of the below question over and over yesterday: “I heard that the Fed cut the rate by 1/2 percent; can I lower my mortgage rate by 1/2 percent?” We would respond by explaining that the “Fed Funds Rate” often does not correlate to mortgage rates for a variety of reasons. […]Read More

Appraisal Waivers; Appraisal Contingency Waivers; & DANGER!

Many lenders are again touting “Appraisal Waivers” as something unique that only they offer. Appraisal or “Property Inspection Waivers” are, however, available to every borrower obtaining a “conforming” loan (that conforms to Fannie Mae and Freddie Mac guidelines). Fannie and Freddie simply use an algorithm that decides when to grant appraisal waivers. If we get […]Read More

Interest Rates Hit All-Time Low? Yes & No

10-YEAR TREASURY YIELDS HIT ALL-TIME LOW; MORTGAGE RATES DON’T ALWAYS FOLLOW THE 10-YEAR There is so much talk about rates hitting “all-time lows” that I wanted to discuss it in a blog quickly. 10-year Treasury bonds are hitting all-time lows and then some, currently sitting at 1.16% as I type. It is the 10-year Treasury […]Read More

The Myth of “Starting Amortization Over” When Borrowers Refinance – Save the Savings!

I received the below email from a borrower this week: “I’m about 3 years into my current loan, and am looking into another refi. My monthly payment savings will be about $400 per month. How do you figure out the savings overall when you consider a new loan will cost about $80k in additional interest […]Read More

Why Does Coronavirus Affect Rates So Much? Will It Last?

Rates remain near all-time record lows and Coronavirus concerns are the primary reason why. REASONS FOR CONCERN Spanish Flu: The Spanish Flu epidemic from 1918 – 1920 infected 27% of the world’s population (or 500 million people). It ended up killing between 50 million and 100 million people, making it the deadliest epidemic of the […]Read More

Gift of Equity Instead of Down Payment – When Family Sells to Family

This is a reminder that sellers can “Gift Equity” as all or a portion of a down payment. If the entire down payment is a “Gift of Equity,” it needs to comprise at least 20% of the purchase price. If the Gift of Equity is less than 20% of the purchase price, buyers must still […]Read More

Rates Keep Falling; Rates Keep Falling, Down, Down; What’s Going On?

I stole my subject line from the 1985 Simple Minds song – Don’t You Forget About Me… OK – they might have actually sung “‘Rain’ keeps falling…” but I was an economics-obsessed econ major, so I heard “Rates.” Because rates were falling! From almost 18.5% in 1981 all the way down to 12% in 1985! […]Read More

Why & When Appraisals Do NOT Equal Market Value

BEATING THE APPRAISAL DEAD HORSE I beat this dead horse more than any other simply because the issue surfaces so often. This week was no exception when a buyer of ours got cold feet when his appraisal came in $25,000 under contract price. This happens from time to time in hot markets whenever there are […]Read More

WWI General Court-Martialed for Bucking the System/Recommending Better Tech!

General Billy Mitchell is one of the more fascinating stories in American military history. He was a WWI combat hero who ended up in charge of airplane and tank development in the 1920s. He quickly saw that all future wars would be won or lost by the combatants with the best airplanes and tanks. As […]Read More

More HOA Dues = Less House; Personal Litigation

HOA DUES = LESS HOUSE This is another reminder that HOA dues can significantly offset purchasing power, as HOA dues are a payment that affects debt ratios like every other monthly payment. In this low-rate environment, $100 of HOA dues can offset purchasing power by as much as $20,000. In other words, a buyer looking […]Read More

The Importance of Life Events & Big Data – One More Time

We hosted a large Tech Expo recently and we had two presenters discuss the importance of “life events” again. I have discussed this numerous times now but want to hit again simply because the topic is so important; because data is so much more accessible now; and because the data can help ALL of us […]Read More

The “Mother” of All Testimonials :) (Winnie the Pooh Too!)

I try very hard to keep this blog as informative as possible, without inserting too much “Rah, Rah JVM!” material. But sometimes, I can’t resist – especially when even the “Rah Rah” stuff is informative. We work extremely hard to cultivate relationships with real estate agents, primarily by pointing out all we can do for […]Read More

5 Key Credit Reminders & Misconceptions

#1 – Consumer credit scores are not the same as mortgage credit scores. Borrowers often share their credit scores with us, as if those scores are set in stone. Those scores, however, are often generated by online “consumer” oriented scoring models that are much less stringent than the scoring models mortgage lenders employ. As a […]Read More

Signing Bonuses = Higher Rates; No Free Lunch In Mortgages

Heejin and I have been offered seven-figure “signing bonuses” (in exchange for aligning with a new mortgage bank) on numerous occasions by large mortgage banks trying to lure JVM under their umbrellas. We always say “no thank you” without hesitation b/c we know for certain that there are no free lunches in the mortgage world. […]Read More

10% Down With No PMI; Overrated?

Most agents and buyers know that Private Mortgage Insurance (PMI) is usually necessary when a buyer puts less than 20% down. What most people don’t know is that almost every lender offers a “10% down loan with NO PMI,” even though loan officers often market these products as “unique offerings.” 10% down with no PMI […]Read More

Capital Gains Taxes On Real Estate

CAPITAL GAINS 101 The IRS and many states collect capital gains taxes on the difference between what someone pays for an asset (their “basis”) vs what they sell it for. This tax applies to most assets such as stocks, cars, boats and of course real estate. EXCLUSION AMOUNTS The IRS allows property-sellers to ignore capital […]Read More

Excessive Worrying About Tech Disruptions

JVM WILL DIE (or change) (a lot) 10 years from now JVM Lending will not exist… in its current form (or anything even close). The same holds true for ALL of the major real estate brokerages we work with. AI, 5G, Cloud Storage, Bots, and every other aspect of tech will without a doubt massively […]Read More

Cash Out Refis – What, Why, When; Rates?

Reminder: Owner Occupancy Ratios in condo complexes are irrelevant if a buyer intends to occupy the unit. Owner Occ Ratios can be as low as 10% and Fannie or Freddie will still finance the unit. FHA and investment purchases, however, require owner occ ratios to be over 50%. CASH OUT REFIS Almost 90% of all […]Read More

Why I Was So WRONG About Interest Rates Rising – Part CCXXIX

If you Google the word “Wrong,” the below picture pops up in the results: OK… that is a real photo taken at a holiday party (in a photo booth – thank you Danny Winkler) when I really did think rates were going to shoot up. BUT, I am pretty sure I was not thinking about […]Read More

#1 Reason We’re Not In A Housing Bubble; Life Events & Housing

I am asked every week by friends, family, team members and clients if I think “now is still a good time to buy” and “do I think we are in a housing bubble.” Even though I blog about this often, everyone still wants reassurance. And some of the strongest reassurance I have yet to see […]Read More

Simple Tech Solutions That Work! Insights from Top Agent Who Uses Them

I have attended hundreds of symposiums, talks, seminars, expos and events of every sort over the last 30 years – giving me more than enough exposure to learn what types of events are the most interesting and rewarding. The events I like the most are: (1) short overall (a few hours at most); (2) comprised […]Read More

Condition/Foundation Issues – How To Handle?

Agents often ask us about properties with condition issues and last week was no exception when an agent was looking at a property with major foundation problems. In light of this, I thought it was time to set out some of the options once again. I. DON’T TELL US 😊 (NON-DISCLOSURE) If lenders/underwriters are made […]Read More

Smoke and Carbon Monoxide Detectors Required – Contract Provision?

Time and again, we have to send appraisers back out to re-inspect properties to verify the presence of both Smoke and Carbon Monoxide (CO) Detectors. This is frustrating for us b/c the detector requirements have been in place in CA since 2010, the re-inspections can delay closings, and agents often inexplicably get upset with us […]Read More

Apology to Coldwell Banker! Rent Back & Max Financed Property Reminders

I want to extend my sincerest apology to Coldwell Banker, and particularly to all of the excellent Coldwell Banker agents we get to work with regularly! On Monday, I blogged about the shutdown of an excellent brokerage and brand (Climb) and my only point was to remind agents of the importance of fully establishing their […]Read More

4 Options for Buying Homes for Parents

We are often asked if buyers can purchase a property with “owner occupied” financing for their parents. Our answer is “it depends,” but the frequency of the question prompted me to set out four options below. I. SECOND HOME “Second home” financing is almost as favorable as owner-occupied financing, so this is a great option […]Read More

Legal Sources of Funds; FHA Purchase to $800,000

I received the following questions from a very seasoned real estate agent the other week: “I have a 3.5% down offer for $795,000 on my desk – A. Does FHA even go that high; and B. What are the legal sources of funds for a down payment and closing costs?” MAX FHA LOAN AMOUNTS In […]Read More

Major Brokerage Shutdown in Bay Area – Biggest Lesson?

Realogy to shutter Climb, integrate it into Coldwell Banker That was the Inman headline and news that shocked the Bay Area last week. It was so shocking b/c Climb has done a beautiful job building a formidable brand in the Bay Area since its inception in 2010. We at JVM had been watching it closely […]Read More