“This was the worst week for mortgage rates in 3 years – and it may be just the beginning”

Rates fell sharply on Wednesday and everyone breathed a sigh of relief and started locking like crazy. But then rates shot up again yesterday and a friend of mine sent me this link to a short CNBC article with a title that I borrowed for the above subject line. Here are the article’s key points: […]Read More

More Condo Reminders – Non QM; Owner Occ Ratios; Condo vs. Townhome; 12 Considerations

Below are a few more reminders for condo buyers. Non-QM Loans for Condos There is a condo complex near our office that is still 25% owned by the developer. This is a deal-killer for Fannie, Freddie, FHA and Jumbo lenders. But, we have a Non-QM investor that has no issue with this. So, this is […]Read More

What Are iBuyers (Zillow/Opendoor) Really About? Lead Gen, Revenue Growth & Friction

Inman has a great video about iBuyers (companies that buy homes directly from consumers) called “Battle of the Behemoths” and it conveys a really interesting perspective. Zillow hopped into the iBuyer market for reasons many don’t understand. iBuying for Revenue Growth First of all, Zillow’s revenue growth from their “Premier Agent” program (selling Zillow leads) […]Read More

Bankruptcies Up; How Long Do They Have to Season for Mortgage Financing?

In another indication that we are at the tail end of a business growth cycle, Bankruptcy (BK) filings are increasing even though the economy remains relatively strong. BK filings were up 3% year over year in July, with 64,000 filings nationwide. And, almost 800,000 people are expected to file for BK protection by year-end, as […]Read More

Bridge Loans; Buying Before Selling – Best Financing Option

BUYING BEFORE SELLING Sellers often want to buy a new home before selling their current residence for a variety of reasons. They might want more time to move, more time to fix up their current house before selling, or more time to fix up the new house before moving in. They also sometimes want to […]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

How “No Cost Loans” and “Lender Credits” Work; No Free Lunches

“NO COST” Vs. “NO POINTS” REFI We recently locked in a $775,000 refinance loan at 3.625% at “no cost.”  (Keep in mind that many factors affect a borrower’s rate, so these numbers only reflect one particular borrower.) “No cost” means that we will use our commission or rebate to pay for all of the borrower’s […]Read More

Why Nobody Takes ARMs (Adjustable Rates); Inverted Yield Curves; Recessions

SELLING ARMS IN THE 1990s There was an event in 1995 that gave a wonderfully powerful jolt to my book of business. A sales rep from a lender called LaSalle came by our office and told us about the Adjustable Rate Mortgages (ARMs) his firm offered. They were 5 and 7 year ARMs in the […]Read More

FHA & VA Myths, Rates and Refi’s

LOAN OFFICER QUOTES RIDICULOUS FHA RATE We hosted a large first-time homebuyer seminar recently and one of the attendees had just been pre-approved by another lender for FHA financing. The loan officer convinced her that she was only marginally qualified, that FHA loans are harder and that FHA rates are higher. He quoted her a […]Read More

Who Funds Mortgage Loans? Banks, Credit Unions, Mortgage Banks, and Brokers

We host “Homebuyer Seminars” for buyers and “Mortgage 101 Seminars” for agents, and one of the slides that always derives a surprising amount of interest is the one that sets out the different mortgage origination channels. This is b/c there are so many companies and individuals offering mortgages that it can be both very confusing […]Read More

Protect Your Local Lender :) (Even If It Is Not Us)

I remember the vicious phone call vividly. I took BART into the City on a Friday night to meet my wife Heejin for a date and was climbing the stairs out of Embarcadero station when I received a call from the angriest borrower I had ever dealt with. She was spitting nails, vitriol and profanity […]Read More

iBuyers; Higher Fees vs Lower Commission; Friction Avoidance All Over Again

The National Real Estate Post recently posted this interesting comparison of iBuyers and real estate agents. As most of you know, iBuyers are large firms that buy homes from sellers outright so sellers don’t have to go to the trouble of listing and showing their homes. The iBuyers then resell the properties as quickly as […]Read More

Competing With Builder Financing – False Enticements & Lender Credits!

Most new home builders offer large credits to buyers who opt to use the builder’s preferred mortgage company. The credits come in the form of interior “upgrades” (better floor coverings, cabinets, appliances, etc.) and/or in the form of closing costs. Sometimes the builders’ offers are very competitive b/c the builders are willing to “give away […]Read More

Occupancy Checks – What Are They and Why?

I remember the turmoil and state of panic like it was yesterday, even though it happened during my first month in the business in 1994. A lender that funded one of our brokered loans did an “occupancy check” about a month after our loan closed and discovered that the borrower had lied about occupancy. The […]Read More

Pending Divorce Can Be A Deal Killer; Rent Backs; Delayed Financing

Here a few quick reminders: Pending Divorces can be deal killers. This is b/c underwriters need to know what the final obligations will be for both spouses before they can issue a loan approval. If a divorce is pending with no finalized and recorded divorce decree, underwriters have no way of knowing what a spouse’s […]Read More

Much Better Alternative to “Hard Money” – “Investor Advantage”

We often get borrowers who lack sufficient verifiable income to qualify for competitive mortgages. If those borrowers had large down payments (25% to 30%), we used to refer them to our Hard Money or more euphemistically our “Private Money” sources, as they require nothing but collateral and a large down payment. But, we now fund […]Read More

JVM Has Never Funded A Mortgage Loan! Here’s Why.

In 13 years of business, JVM Lending has never funded a single mortgage loan. This is b/c there are actually no mortgages in CA and Texas, and JVM is really a “Deed of Trust” lender (as CA and Texas are “Deed of Trust” states). Everyone uses the term “mortgage” generically to refer to any loan […]Read More

Equity Lines and Mortgage Funds = Seasoned Funds

This is a quick reminder that “cash out” from equity lines, second mortgages and first mortgages is considered to be “seasoned funds” no matter how recently the cash was obtained. Lenders want to make sure all funds are “sourced” and “seasoned.” “Sourced” simply means that we know exactly where the funds came from – which […]Read More

Lenders Often Don’t Need Tax Returns

It is a common misconception that lenders always need two years of tax returns for income verification. They don’t. If borrowers are “W2 Wage Earners” only, with no self-employment or side income of any kind, lenders often only need two years of W2s and a month’s worth of paystubs for income verification. These “W2 only” […]Read More

Are Low Rates The “New Normal?” The Fed Is Irrelevant

For years I have been repeating the predictions of various market experts about how interest rates have to go up at some point. And for years, I have been dead wrong! My wrongness was only illuminated again with the recent dramatic drop in rates. All this only makes me think that low rates may now […]Read More

Unexplained Deposits, Seasoned Funds, Sources For Seasoned Funds

I mentioned yesterday how “unexplained deposits” on bank and investment accounts often create problems when transactions are in escrow. This is b/c lenders want to make sure all funds going toward a down payment are “seasoned.” “Seasoned” means that the funds have been in a borrower’s bank account for over two months and/or that the […]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

Godzilla vs. Bambi; Zillow vs. JVM

In the classic 1969 film, Godzilla vs. Bambi, the action only lasts for 90 seconds as Godzilla stomps Bambi into oblivion with a single step. But, that was in 1969. In 2019, the much smarter Bambi would be empowered and waiting for Godzilla with superior technology and nimbleness. He would most certainly take Godzilla out […]Read More

Low Rates & Early Pay Off Penalties; Six Months Is All We Ask

Rates have fallen about 1/4 percent over the last few weeks and they are almost 1% lower than their peak only a few months back. As a result, everyone is rushing to refinance again, as I mentioned in yesterday’s blog. Mortgage lenders love the onslaught of business even though it fosters some major risks. One […]Read More

The Fed Halts Rate Increases; Good Or Bad?

Yesterday, the Fed announced that there will be no more rate hikes in 2019. And many people in the mortgage and real estate industries cheered. But a lot of economists and Fed-watchers are more worried than ever. Here is just one of many articles (from the WSJ) I read today illuminating serious concerns. The Fed […]Read More

Inflation: The One Reason No Buyer Should Get Cold Feet

Everyone knows there are many reasons to buy a home, including: (1) enjoying the pride of ownership; (2) locking in a low interest rate; (3) fixing your housing payment; (4) taking advantage of tax savings; and (5) building equity, among other things. But, most people do not appreciate how important real estate can be as […]Read More

Only One In Five Willing To Apply for a Mortgage Online

We recently spent $26,000 on a new “point of sale” platform (Blend) to make it even easier for our borrowers to apply online. This was a lot for us as a small business, but it is nothing compared to the $80 million that Loan Depot spent to develop their online application and related technology. But, […]Read More

States With Lowest Mortgage Rates; CA Wins! Why? Bringing Low Rates To Texas!

Lending Tree recently did a study to see which states offered the lowest mortgage rates. And surprisingly, California (the land of all-things-expensive) won! The next best states for low mortgage rates were New Jersey, Washington, Massachusetts, Utah, and Colorado. The worst five states for rates were New York, Iowa, Arkansas, Oklahoma, and Maine. WHAT INFLUENCES […]Read More

Rate Locks – How They Work; Who Pays; Wells Fargo

Wells Fargo was sued in 2017 for charging borrowers for “lock extensions” even though the delays that fostered the need for the lock extensions were clearly Wells Fargo’s fault. It was blatantly dishonest on the part of Wells and they deserved the resulting bad press; you can read more about it here. At JVM, we […]Read More

Impound or Escrow Accounts & Why We Do Not Recommend Them

Impound or escrow accounts are maintained by lenders or servicers and are set up to allow buyers to pay their property taxes and hazard insurance on a pro-rata monthly basis instead of on a semi-annual or annual basis. For example, if property taxes are $6,000 per year, and hazard insurance is $1,000 per year, a […]Read More

JD Power’s Mortgage Lender Survey – What Borrowers Want

The lender you refer your clients to is a reflection on you. I repeat that often b/c it is true and b/c we meet so many agents who are having issues with their lenders. In light of this, JD Power’s recent survey of borrowers should be of particular interest, as it illuminates what borrowers look […]Read More

Bankruptcy Seasoning Requirements – 0 to 7 Years

Here are the seasoning periods necessary after a borrower files for bankruptcy protection. FHA Financing with 3.5% Down Chapter 7 (Debt Liquidation) BK: 2 years from discharge Chapter 13 (Debt Payoff Plan) BK: 0 years with court approval if borrower is still in the BK. Conventional Financing All Bankruptcies: 4 years from discharge Jumbo Financing […]Read More

Divorce Season; Things to Know About Mortgages and Divorces

As a friend in the industry reminds me every year, “divorce season” is now upon us. People don’t like to file for divorce around the holidays or during hectic summers, so March turns out to be the peak filing month. With that said, I am repeating key information that everyone should know about mortgages and […]Read More

When Buyers Need to File Taxes Early?

In Monday’s Blog, I explained why buyers often do not need to file 2018 tax returns until October. But there is one case when buyers should file taxes as soon as possible. Self-employed buyers should definitely file ASAP if their 2018 income was higher than 2017’s (if they want to qualify for a larger loan […]Read More

When Do Buyers Need to File 2018 Tax Returns?

Lenders don’t actually need 2018 tax returns until October in most cases, as October 15th is the final deadline for filing. After April 15th, lenders will require 2018 tax returns OR a copy of the request for an extension that was sent to the IRS. If buyers provide a copy of their extension request, they […]Read More

Call Center Horror Story :) The Need for Training & Skill

CALL CENTER FAIL Last week a borrower came to us to discuss her refi b/c she had lost trust with the lender she was working with (America’s largest non-bank lender). In any case, she was trying to refinance the house she lived in but it was owned by her Dad and she was not on […]Read More

Another Gov’t Shutdown Update; Must Be On Title If On Loan; Title Only

GOVERNMENT SHUTDOWN NOT AN ISSUE FOR MOST BORROWERS I read recently that there are buyers waiting on the sidelines b/c of concerns about the government shutdown. They shouldn’t be b/c the shutdown is not affecting that many buyers. There are some issues causing delays such as furloughed employees not being able to close until they […]Read More

Max Number of Financed Properties

We often see borrowers with multiple financed properties nowadays b/c so many of them have been on buying sprees since 2008. Having more than four financed properties used to be an issue b/c so many lenders and investors were excessively restrictive after the 2008 meltdown. But, guidelines have definitely softened and there are now multiple […]Read More

The Beverly Hillbillies Recession Prediction – A Recession Is Coming For Sure!

CURING THE COMMON COLD When I was a kid I loved a TV show called The Beverly Hillbillies. It was about a family of hillbillies who struck oil, got rich and moved to Beverly Hills. The family matriarch was Granny and she had a cure for the common cold that made the family’s banker (the […]Read More

How The Government Shutdown Will Affect Mortgages

Many people are wondering how the government shutdown will affect the funding of mortgages. The last time we endured a protracted gov’t shutdown was in 2013 when it lasted for 16 days. PRIMARY CONCERNS: TAX TRANSCRIPT (4506t) VERIFICATIONS AND FLOOD INSURANCE At that time, the only major holdup had to do with Tax Transcript Verifications […]Read More

Wartime & Economics in The Mortgage Industry

A few random mortgage industry stories. TOP AGENT WON’T REFER CLIENTS TO CLOSE FRIEND: This week, Heejin (my wife & co-founder) was visiting a top producing Realtor in Texas who refused to refer clients to her close friend who was a loan officer. The reason? Her friend’s rates were too high and her clients complained. […]Read More

Why Hard Money Is Dead; “Healthy” Sub-Prime Lending Is Back

WHAT IS HARD MONEY “Hard Money” or “Private Money” refers to mortgages made by private (non-institutional or non-bank) investors or funds that focus almost exclusively on collateral (the property) and not on a borrower’s credit-worthiness. In other words, hard money lenders will give almost anyone a mortgage as long as they have 30% of the […]Read More

ARMs; Asset Depletion Loans; Debt Service Coverage Loans; Mixed Use Properties

Here are a few quick mortgage reminders/updates: I. JUMBO ARMs REMAIN VERY LOW.  I mentioned yesterday that our Jumbo 30-Year rates are as low as ever, but our JUMBO ARMs are even lower.  Our 7/1 ARMs, for example, remain in mid-3%range for no-points loans for qualified borrowers. II.ASSET DEPLETION LOANS.   These are the perfect option […]Read More

2019 Conforming Loan Limit Increases – Good and Bad

PEOPLE WALKED AWAY FROM MORTGAGE OBLIGATIONS B/C THEY WERE UPSIDE DOWN In 2006, a relative of mine asked me to help her qualify for a condo purchase. Wanting to help, I loaned her enough money to clean up her credit, to pay off her consumer debt and to make a down payment. I then cosigned […]Read More

When Experts Are Very Wrong – Market Timing

Pierre Andurand is a highly educated French businessman, billionaire and hedge fund manager who is an expert in oil, as oil is the primary focus of his giant hedge fund. As recently as June, Mr. Andurand predicted that the price of oil would hit $100 per barrel in 2018, and that it could rise as […]Read More

Seller Credits: When? How Much? Do They Slow Down Transactions?

Many buyers get credits for closing costs in lieu of credits for repairs, as most people know. If credits are for repairs, underwriters will require that they be completed prior to close which could cause delays. As such, it’s easiest on the lending side for the credit to be referenced on a simple RPA addendum […]Read More

Buyers Can’t “Roll Closing Costs” Into Their Loan; Options?

Total closing costs for a purchase transaction can vary from $5,000 to $30,000, depending on purchase price, loan amount, type of loan, month of the transaction and location of the transaction. This is b/c closing costs include not only the standard title, escrow, appraisal, underwriting fees, etc.; closing costs also include prepaid interest and property […]Read More

Why Lender-Paid Mortgage Insurance Isn’t Such a Good Deal

We are seeing borrowers come to us with quotes from online lenders for conventional loans with LTV > 80% but NO mortgage insurance. What the borrowers don’t realize is they are being quoted for a Lender-Paid Mortgage Insurance product (LPMI). With LPMI, a lender simply waives PMI requirements in exchange for a higher interest rate. […]Read More

15 Day Close Resumé! My Dog Kevin; Ask For A Resumé Please :)

Every lender and their dog is now claiming they can close in 15 days, when they probably…can’t. How do we know?  B/c we close in 15 calendar days all the time, and we know how hard it is. I even caught my own dog Kevin bragging that he could close in 15 days, and our […]Read More

Types of Loans: FHA, VA, Gov’t, Conventional, Conforming, Jumbo, etc.

There is often a lot of confusion about the names and types of mortgages available in the market place. Here is some general information to address some of the confusion. I. “Government Loans” are mortgages that are either insured or guaranteed by the government or a government agency. They include FHA, VA and USDA loans. […]Read More