JVM Aligns With New Mortgage Bank; The Need For Speed & Jumbo!

We recently aligned with a new mortgage bank for three reasons: (1) to drastically shorten our closing periods; (2) to offer even lower rates; and (3) to access much better jumbo options. We have nothing against our former mortgage bank at all, as we simply were not a good fit for their model and we […]Read More

“The Next Housing Boom Is Closer Than You Think”

The title of this blog is taken directly from this blog by Stansberry Research. I have hit the topic of a strong housing market numerous times in recent months but am hitting it again for several reasons: (1) Stansberry Research normally touts stocks, so when they shift to touting housing it means something; (2) some […]Read More

“Stips;” Loan Salability; Facing Huge Losses; And Why A Competitor Went To Bat For Us

What is the scariest thing on the planet? For mortgage banks, it is an unsalable loan. Mortgage banks literally borrow money to fund mortgage loans – using what is called a “warehouse line.” Mortgage banks only make money if and when they sell those loans that are “sitting” on their warehouse lines. For example, when […]Read More

Refinancing After Forbearance; Credit Inquiries

Over 4 million borrowers went into mortgage payment “forbearance” during the COVID-19 crisis, and many are now starting to end their forbearance periods – and wondering if they can refinance. Here are some of the guidelines. AUTHORIZED FORBEARANCE – PAST BALANCES PAID If borrowers with a formally authorized (by their servicer) forbearance formally end their […]Read More

Purchase Applications Hit 11 Year High; Refis = 63% of Volume

The Mortgage Bankers Association surveys multiple mortgage banks every week and then releases all of the data. The most recent survey, discussed in this National Mortgage News article, is particularly interesting. Here is just some of the data: Purchase applications are at an 11 year high. Refi applications are 106% higher than last year at […]Read More

Interest Only Loans Vs. Fully Amortized Loans

Borrowers often ask for “Interest Only” (IO) loans b/c they want lower mortgage payments, and we discourage them for a variety of reasons. I am discussing the pros and cons today. REASONS TO WANT AN IO LOAN: Payment Flexibility: Borrowers with cyclical income want lower payments during slower times (assuming payments really are lower – […]Read More

In Defense of Cities & Large Offices

I once had a client who was a commercial airline pilot living in San Francisco. As a pilot, he could live anywhere in the U.S., so he decided to sell and use his equity “to pay cash for paradise” in Tennessee. He lasted two years. He moved back, at an enormous cost, b/c he missed […]Read More

Buyer or Seller: Who Pays Real Estate Commissions?

How are real estate commissions set and who is responsible for paying them? We find these are common questions among both buyers and sellers. Who Pays Real Estate Agent Fees? Here’s the short answer: In California and Texas, as in most states across the country, the seller is typically responsible for both the selling agent’s […]Read More

Yoga Babble & Pizzas Under Cost – Heading Our Way Soon!

A prominent mortgage bank posted this employment ad last week in a very popular mortgage blog: The company culture at ****** Mortgage is a direct reflection of the lender’s vision to Inspire Hope, Deliver Dreams, and Build Prosperity. I laughed when I read that b/c I am pretty sure the company really just originates and […]Read More

Home Values – This Ain’t 2008! WHY? Inventory and Demographics

I was interviewed yesterday by a prominent financial reporter who is, for obvious reasons, mired in the very “news” I suggested avoiding in my Wednesday Blog. B/c she is so caught up in all of the negative news, she seems convinced that the housing market could easily see a repeat of 2008 when values dropped […]Read More

“Non-Bank” Mortgage Lenders vs. Banks; Who Are The Players? Why It Matters

Most Americans have never heard of PennyMac, United Wholesale Mortgage, loanDepot, and Freedom Mortgage. These are just a few of the huge “non-bank” mortgage lenders that funded almost 60% of all mortgages last year. The only “non-bank” player that most Americans have heard of is Quicken Loans, and that is b/c of its massive amount […]Read More

Obtaining Mortgage Financing After A Forbearance

RULES FOR QUALIFYING POST-FORBEARANCE With millions of future borrowers in either mortgage or rental forbearance, many people are wondering how forbearances will impact a borrower’s ability to qualify for mortgage financing down the road (when they are out of forbearance). Credit: The jury is still out on this, as borrowers with authorized forbearances were not […]Read More

HELOCs Fading; Jumbo Rates Way Higher; FAQs

Two of the nation’s largest banks announced that they will no longer originate new Home Equity Lines of Credit (HELOCs). This is of course in response to the COVID-19 crisis. We still offer HELOCs but only to 90% Combined Loan to Value (95% CLTV no longer exists) and only for purchase money financing. In Texas, […]Read More

Mortgage Banks Don’t Make Enough Money for Introlend/Referral Fees

DONUT SHOPS ARE LIKE MORTGAGE BANKS Years ago, I helped a couple that owned a donut shop refinance – and I was shocked by how thin their margins were; they were working 75 hours per week and making very little money. BUT, if I had offered to somehow refer them 50% more customers in exchange […]Read More

Jumbo Financing Lives! Appraisals Getting Done; Bridge Loans; Interest Rate Update

JUMBO FINANCING STILL AVAILABLE Agents continue to ask us if we are still offering jumbo financing – and the answer is emphatically yes! Rates remain in the mid-3% range for strong borrowers with 20% down and ample reserves. Weaker borrowers (with less than 20% down, limited reserves and/or lower credit scores) in the jumbo price […]Read More

Please Share Our Content; How Fast Will The Economy Recover?

We love it when readers share our content – so please feel free to continue doing so. We only ask for a credit and a “linkback” to our website whenever content is shared – something like the below: Content Source: Jay Voorhees of JVM Lending – “#1 Reason We’re Not In A Housing Bubble; Life […]Read More

Goldman Sachs Loves Housing Still; COVID-19 Will Push People Away From Cities

In October, I blogged about my millennial nephew paying $4,250 per month in rent in San Francisco. I pointed out that the property he was renting was worth about $2 million and that he was probably better off renting – IF he stayed in San Francisco. His financial planner and I, however, both told him […]Read More

Borrowers In Forbearance See Credit Whacked! Purchase Market Lives: Texas Re-opens

FORBEARANCE IMPAIRS CREDIT – DESPITE “CARES ACT” On Saturday, David Stevens, former President of the Mortgage Bankers Association and the current CEO of Mountain Lake Consulting, posted a notice on LinkedIn stating that some creditors and credit bureaus are in fact showing mortgages in forbearance as “late” and “in forbearance” on credit reports. According to […]Read More

Elephant In Room: Housing Prices; HELOCs Too

Chase stopped accepting applications for home equity lines of credit (HELOCs). I mentioned this previously, but in 2008, HELOC lenders not only stopped taking applications but they also froze existing HELOCs. Given the trends, HELOC borrowers in need of cash might consider drawing on their HELOCs now before they are frozen (as I mentioned in a […]Read More

Jumbo Market Lives; Inflation = Windfall; Why Lenders Are Terrified of Forbearances

I am repeating this b/c I am still getting so many questions: The Jumbo Market Definitely Lives. Jumbo buyers with 20% down can buy up to $1.6 million in CA and up to $1.4 million in Texas with 1st/2nd Combo Financing. I recently blogged about combo financing here. Traditional jumbo lenders remain in the marketplace […]Read More

COVID-19 Mortgage Updates; Interest Rates; Jumbo; Guidelines; Appraisals

Below are a series of important COVID-19 updates as they relate to the mortgage industry. INTEREST RATES Jumbo interest rates are now about 1% higher than conforming rates. This is in sharp contrast to the previous few years when jumbo rates were almost always lower than conforming rates for strong borrowers. Low balance (under $510,400) […]Read More

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

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

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

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

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

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

10% Down to $1.24 Million; 5% Down to $1.07 Million

“High Balance” Conforming Loan Limits are now $765,600 in “High Cost” areas, which include much of coastal California including the Bay Area. These much higher conforming limits now allow buyers to purchase homes in the $1 million+ range with much smaller down payments – if they couple their first mortgage with a “piggyback” Home-Equity-Line-of-Credit (HELOC) […]Read More

Predictions for 2020 – Higher Rates; Tech Disruptions; Fight for Eyeballs; Collapse of Mortgage Industry; Start of Boom

I have read dozens of predictions of various sorts over the last month, so I thought I’d add a few of my own. HIGHER RATES While many pundits like Barry Habib (owner of MBS Highway) think there will be a recession next year, resulting in sharply lower rates (b/c all of our economic indicators have […]Read More

No “Business Funds” Please

We have a section in our “Buyer’s Guide” on our website titled Actions to Avoid After Getting Pre-Approved. It includes all kinds of actions that borrowers need to avoid so they don’t slow down their transaction or blow up their ability to qualify altogether. Actions to avoid include co-signing for another person’s debt; filing tax […]Read More

OK Boomer; Millennials At Their Best

“OK BOOMER” = WORD OF THE YEAR As an official baby boomer (born in 1962), I love to make fun of millennials, oblivious, of course, to how much they make fun of me back. According to this recent WSJ article, the phrase “OK Boomer” is likely to become the “Word of the Year.” The author […]Read More

When You Should Drop Your Husband

Yesterday, I received the following text from a savvy agent we have worked with for years: “I received an offer on a property and it’s ‘wife only,’ stating ‘husband is starting a business and that’s why he isn’t on the loan.’ I didn’t just fall off the turnip truck. Does this mean the husband has […]Read More

Bridge Loans Overrated? Why We Like Equity Lines

We are asked constantly about “bridge loans,” or temporary loans (usually 2nd mortgages) that sellers take out prior to selling. Bridge loans can be used for necessary repairs or for a down payment to allow sellers to buy a new home before selling their old/current home. There are several types of bridge loans available including […]Read More

No VA Loan Limits! FHA and Conforming Loan Limits Way Up!

VA LOAN LIMITS ELIMINATED – 2020 When “VA loans” first surfaced in 1944, the average cost of a house was only $8,600, making “loan limits” a nonconcern for the most part. As home prices rose, however, loan limits or maximum loan amounts were put in place just like they were for FHA and Conforming loans. […]Read More

JVM Has A Down Payment Assistance Program; When Down Payment Assistance Programs Are Overrated

JVM offers the Chenoa Down Payment Assistance Program (DPAP). The “assistance” is a 3.5% (of purchase price) 2nd mortgage that can be coupled with either a 96.5% loan-to-value FHA loan or a 97% loan-to-value conforming loan. Hence, qualified borrowers can purchase a home with no down payment. The 3.5% 2nd mortgage is at a rate […]Read More

“Rising Bond Yields Ease Recession Fears” Does It Matter?

The title of today’s blog is from this recent WSJ article (as always, we can send key excerpts to non-subscribers). The article quotes Fed Chairman Jerome Powell, as he pointed out how strong consumer spending and employment numbers indicate that the U.S. economy remains robust and should retain its health into the near future. Inflation […]Read More

No Lender Fees & Lender Credits = Higher Rates; No Free Lunches

We recently had a Texas borrower almost leave us for a competitor that was offering “no lender fees, no appraisal fee and a small credit for closing costs.” Fortunately though, the borrower sent us the “Loan Estimate” from the competitor and we were able to see that the competitor was charging a higher rate. In […]Read More

FHA Spot Approvals for Condos; We Are Getting Them Already

I mentioned a few times now how HUD is now granting “Spot Approvals” for FHA financing for single condo units within condo complexes that are not FHA approved. We have already made several requests for spot approvals and have received answers in about a week each time. To obtain a Spot Approval we need the […]Read More

Airbnb/Vacation Rentals – Can Lenders Use Income? Are They Allowed?

When buyers purchase multiple unit properties or single family rentals, they can use future rents to help qualify for the purchase, as I mentioned in Friday’s blog. Multiple unit buyers can use the market rents from units to qualify even if the units are vacant. Similarly, investors, purchasing a single family residence, can also use […]Read More

Correlating to the Worst Credit on a Loan Application When There Is More Than One Borrower

When discussing credit with our borrowers, we often hear something like this: “My credit score is only 670, but don’t worry; my wife’s score is over 800!” Unfortunately though, lenders correlate to the worst credit on the loan application when there is more than one borrower. LOWER MIDDLE SCORE Most mortgage lenders check credit with […]Read More

Zillow and Other “Most Flawed Business Models … Ever”

ZILLOW’S PENDING DEMISE Steven Eisman is the investor who made billions by shorting mortgage-backed securities prior to the 2008 meltdown. He was also made famous in the movie “The Big Short.” Mr. Eisman is now shorting Zillow, claiming it is one of “the most flawed business models he has ever seen.” You can watch his […]Read More

No Bubble Here; FHA Condo Spot Approvals

FHA CONDO SPOT APPROVALS ARE BACK STARTING TOMORROW Starting tomorrow, an entire condominium complex will no longer need to be “FHA Approved” for a buyer to use FHA financing to purchase a unit within the complex. Buyers can now obtain what is called a “Spot Approval” to get just get a single unit “FHA approved.” […]Read More

Charles Schwab No Longer Charges Commissions for Trades

Charles Schwab started to offer discount brokerage services (low commission trades) way back in 1975. Much of the financial industry paid little attention to the upstart firm but it nonetheless continued to grow and capture more and more market share. And then finally, 44 years later, Schwab announced that they would charge no commissions at […]Read More