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

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

Closing Disclosure Out Sooner; Before Clear to Close; Closing Faster

When the dreaded “TRID” regulations came into effect, one of the biggest causes of delay was the Closing Disclosure or “CD.” The CD sets out the final loan terms, and borrowers are not allowed to sign actual loan documents until three business days pass from the signing of the CD. This three-day review period is […]Read More

$100 of HOA Dues = $20,000 Smaller Loan; Delayed Financing

A couple of quick reminders: “Delayed Financing:” Buyers paying cash for properties can recoup that cash with a “cash out” refinancing immediately after they buy. The new loan will be limited to 75% loan-to-value and to the borrower’s actual cash investment (if the buyer uses “gift funds” to buy the house, “delayed financing” is not […]Read More

10 Bold Predictions for the Future of the Mortgage Industry!

Normally, we are loathed to share other peoples’ content, but this is worth an exception:  10 Bold Predictions for the Future of the Mortgage Industry (link to the full article is below) The big takeaways include: Subprime and expanded guidelines are coming, so a lot more buyers can get financing. Technology will replace underwriters and loan officers.  And appraisals […]Read More

Seeing the Unforeseeable – Not Possible; No Crystal Ball

We often pre-approve very strong borrowers only to see their transactions come to a halt after they get into escrow b/c of unforeseen circumstances. Invariably, we get terse emails from either the borrowers or the Realtors telling us that we should have foreseen the issue(s). The issues that blow up transactions, however, are almost always […]Read More

3 Stock Market Indices Hit Records; 1999 Again? 3x More Competitive

All three major stock indices (the S&P 500, the NASDAQ and The Dow Jones) hit record highs on the same day twice in the last week. The last time this happened was in 1999, and we made it another year or so before the dot-com bubble burst. I have no idea if another bubble will […]Read More

11 Million More Steps…

We recently had a Realtor tell Heejin that we needed to get loan documents to title 7 days after we got into contract, before she told Heejin how to run our company in general; the conversation didn’t go well :). In any case, this was interesting b/c the Realtor had been in the business for […]Read More

Loan Origination Channels: Banks, Mortgage Banks, Brokers

We often get questions about the different mortgage origination channels: (1) Commercial Banks; (2) Mortgage Banks; and (3) Brokers. Commercial Banks have dominated the field since the meltdown in 2008 but their share is shrinking. Commercial banks include Wells Fargo, Chase, Citi, U.S. Bank, and B of A. Their advantage is their very low cost […]Read More

Must Be On Title to Be On Loan; Must Refi to Get “Off” Loan

We sometimes have borrowers who want to be “on the loan,” but not “on title” (for tax reasons usually). This is impossible, however, as lenders require all borrowers qualifying for a loan to also be on title. Conversely, we often have borrowers who want to be on title, but not on the loan, and that […]Read More

Reminders: Brick Foundations; FHA; Rental Income; Over-Reaction

A few quick reminders: 1. Brick Foundations Are Not Deal Killers. Lenders allow for brick foundations as long as appraisers state they are “typical for the area” and appraisers are usually willing to do so. 2. FHA Loans are not harder to close than conventional loans. They are often easier and faster b/c of looser […]Read More

“Brexit” – Rates, Turn Times, What It Means? Forecasting?

There was an excellent column in the WSJ today by a former member of Clinton’s administration, called “The End of Economic Forecasting.” http://www.wsj.com/articles/the-end-of-economic-forecasting-1466723149 The author points how the world is dominated by finance now, with over $75 TRILLION in assets under professional management (The entire US economy is only $18 Trillion). With so much cash […]Read More

“Bank Statement Loans;” Non-Agency/QM Loans; Unseasoned Credit

“Sub-prime” or “non-agency” or “non-QM” loans are surfacing again. These are for borrowers who do not meet traditional Fannie, Freddie, FHA or JUMBO Guidelines. Examples include people with unseasoned short-sales, bankruptcies and foreclosures, and self-employed people with insufficient income on their tax returns, but ample cash flow. Self-employed people can use the total deposits from […]Read More

Why We Hate Paying Points (Or Think Buyers Shouldn’t)

Borrowers constantly ask if they should pay points or origination fees to buy down a loan. Our constant refrain is no, and here are the reasons why: 1. Borrowers get too little bang for their buck. In the current market, paying a point will often only improve the rate by as little as 1/8 percent, […]Read More

Why Other Lenders Can Sometimes Do Loans JVM Can’t

Our Mortgage Analysts (MAs) pre-approve over 200 files every month. They see more files in a single month than the average loan officer sees in five years. This is why our MAs are so well-versed when it comes to guidelines and pre-approvals. As a result, their conclusions about pre-approvals and pre-approval amounts are very accurate. […]Read More

Loans = Compliance, Box-Checking, Salability; Not Logic Ever

We have a jumbo borrower right now who is pulling his hair out b/c he is extremely well-qualified but still getting conditioned to death by an underwriter. His file is very complex, as he has assets of all types and multiple income sources. He was convinced the underwriter and investor did not want to lend […]Read More

Need Income History No Matter How Much You Make Now

We often have self-employed borrowers come to us who are rolling in profits and cash, with perfect credit and everything else a good borrower needs. BUT, they do not qualify for financing. The reason is that they often lack the necessary income history. No matter how good their current year may be, we cannot use […]Read More

Early Pay Off Penalties For Most Mortgages – Fee Paid By Lenders

Yesterday a borrower informed us that she intended to pay off her mortgage soon after we close b/c she was expecting a windfall from the sale of another property. The borrower also wants a “no points” loan. In light of this, we’d rather not close the loan at all b/c we will have to pay […]Read More

Difference Between Servicer and Mortgage Holder/Owner

Borrowers often get confused about the difference between their loan’s “Servicer” and their loan’s “Owner”. After a mortgage bank funds and records a loan, they sell the loan either to other “investors” (big banks, insurance companies, pension funds, etc.) or to Fannie Mae/Freddie Mac. In many cases, however, mortgage banks sell the “Servicing” separately from […]Read More

Impounds vs. No Impounds; Sometimes No Choice

We often get asked for advice in regard to taking an impound account or not. An impound (or escrow) account is an account held by a lender or a servicer that accumulates property tax and/or hazard insurance payments. The lender/servicer then uses those funds to make the semi-annual or annual property tax and insurance payments […]Read More

How Long Do Funds Have to Season? Clear Bank Statements

We are often asked how long funds for down payments or closing costs need to “season” before a lender will not question their source. This question arises when borrowers have funds for which they cannot obtain a gift letter or a paper-trail (most common when borrowers use funds from overseas). Funds of this nature usually […]Read More

When Does It Make Sense to Refi? Rule of Thumb; VA LOANS

Quick Reminder: JVM does VA loans (often in fact). The drawbacks to VA, however, include the restriction that we can only use VA appraisers, and that all section I work needs to be complete. We are often asked when it makes sense to refinance? No Cost Loans: If a loan is “no cost” (the lender […]Read More

Cash to Close And Reserves

Borrowers often come to us with just enough funds for their down payment, without accounting for closing costs and reserves. “Reserves” have become a bigger issue lately as more borrowers shift into the jumbo arena. Reserves are the liquid funds left over after a transaction closes. Reserve requirements are usually expressed as a given number […]Read More

10% Down No PMI Explained; No Free Lunch; Not Best Deal

A lot of lenders are touting their “10% down with no Private Mortgage Insurance (PMI)” financing options. JVM, of course, offers this too but we don’t often encourage it b/c it is not the best option for most borrowers. Lenders offer higher loan-to-value loans with no PMI by simply pushing up the interest rate and […]Read More

Misleading Closing Costs Quotes, and Inaccurate Scenarios

JVM spends a substantial amount of time educating buyers, and this process includes multiple “Payment and Closing Cost” Scenarios. We go out of our way to make sure we include every possible cost in our estimates to ensure there are no surprises at closing time. Our estimates include Transfer Taxes, Property Taxes, Interest and Hazard […]Read More

Loans Have To Be “Salable;” No Exceptions For Strong Borrowers

We have seen a few major mortgage companies go out of business lately, despite a strong market for mortgages overall. One of the reasons they went out of business was their inability to sell loans on the secondary market. Mortgage banks fund loans with large warehouse lines or lines of credit. They then sell the […]Read More

When We Do/Don’t “Take” Loans From Other Lenders; 1/4 Percent Rule

We constantly get contacted by borrowers who are already working with or approved by other lenders. Sometimes borrowers come to us before they get their offers accepted, at their Realtor’s urging, b/c they need our speed and reputation to make their offers competitive. Borrowers also come to us b/c their current lender misled them, or […]Read More

The Very Strong Long Term Case For Real Estate/Home Ownership

Financial publications occasionally make the case that renting is better than buying for some people, illuminating lower housing payments, and the avoidance of transaction and maintenance costs. The analyses often ignore the benefits of a fixed housing payment (rents go up), tax savings, and potential appreciation in hot markets, etc. There is, however, one more […]Read More

Arch Mtg Ins; MUCH Cheaper; Algorithms

Today’s Blog is about Private Mortgage Insurance, normally a boring subject, but now fascinating for a few reasons. First, Arch MI is now available for strong borrowers as a fantastic alternative to traditional PMI, FHA financing, and 80/10/10 (1st/2nd Combo) financing. Arch MI is much, much cheaper b/c they use algorithms to calculate risk and […]Read More

TRID: Inaccurate Disclosures/Over Disclosing; Tolerances/Variances

When TRID disclosures first came out in October, we tried to find the positive by pointing out how much clearer the new disclosures were relative to the previous disclosures. We were impressed that a heavy-handed gov’t agency (CFPB) might have actually done something right. But alas, we spoke too soon. To avoid “variance” or “tolerance” […]Read More

When Can Seller Sign? No Impounds If LTV 89.9% Or Less

Two Reminders: Sellers can sign documents at almost anytime after escrow opens for conventional and jumbo transactions (as long as escrow has all necessary terms and time to prepare documents). Sellers do not need to wait for the buyer’s loan documents to get to title before they can sign. With an FHA transaction, however, sellers […]Read More

Deadly Overdraft Charges; 5% Down to $625,500

We had an underwriter deny a loan request recently b/c the borrower had so many overdraft charges on her bank statements. We had to provide multiple statements to verify rent, and there were overdrafts on almost every one of them even though the borrower’s debt ratios were relatively low. Most people don’t realize that repeated […]Read More

College = Job History; CD Flexibility w/ Seller Credits

Reminder #1: Borrowers fresh out of college usually do not need a 2 year work history to qualify for mortgage financing. They usually just need an offer letter and 30 days of pay. Technically, their degree program needs to relate to their employment, but lenders are pretty flexible in this regard. Reminder #2: Seller Credits […]Read More

TRID Allows Seller Credit Changes; Expect More Appraisal Reviews

A couple quick updates/reminders. Seller Credits can change any time without causing major delays** in closing. This was a surprise for us in the post-TRID environment, but changes in seller credits for closing costs do not require a new 3-day waiting period, even if they change after the Closing Disclosure (CD) is issued. ** Seller […]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