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

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

1/2% Since Election; Important Tips For Refi Guys Doing Purchases!!!

The huge rate increases do not threaten JVM’s business b/c we have always been about 85% purchases; we truly are purchase experts. With rates up so much though, the “refi guys” are going to be clamoring into the market offering stellar service and everything else to Realtors in an effort to garner business. So, here […]Read More

ARMs Are Not Evil; Defense of Adjustable Rates

A 47 year old borrower came to us this week with a $1.4 million mortgage and 5 years left on an Adjustable Rate Mortgage (ARM) at 2.875%. He plans to be in the house for the rest of his life and wanted to convert his loan to a 30 year fixed. We told him not […]Read More

The Extreme Need To Say “No”; “Hell No’s” vs. “Hell Yeses”

Heejin’s daughter is too charismatic and popular. I am not being facetious, as it is a real problem. Too many friends and family members want to spend time with her and she is unable to say no; she does not want to miss out, give up relationships or disappoint anyone. She often runs full speed […]Read More

Markets Closed; Veteran’s Day; Brutal Early Pay Off Penalties

We are repeating a blog from May b/c we continue to incur so many Early Pay Off penalties, and b/c a Realtor asked about them 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 […]Read More

What Does Trump’s Win Mean for Mortgages and Markets?

Rates went up with news of Trump’s victory. The markets believe that a GOP controlled White House and congress will foster a more hawkish Fed (more willing to raise rates) and a tighter fiscal policy (less government spending and quantitative easing). This contrasts with what we mentioned in previous blogs. It was thought that the uncertainty created by […]Read More

Click-Throughs; Why Borrowers Qualify For Larger FHA Loans? 56.99%

In our recent monthly newsletter, we measured “click-throughs” for our various articles. Interestingly, the mortgage-related article about debt ratios got the most views. Two things: (1) Be sure to measure your click-throughs when you email newsletters; and (2) Here’s something mortgage related: The same borrower can often qualify for a much higher loan amount if […]Read More

1/4% = $14 per $100k; Can Refi Guys Do Purchases? Automation?

Another reminder: a 1/4% increase in rates from 3.75% to 4.0% only increases payments about $14 per $100,000. One of the biggest boons to my personal business over the last 20+ years was the advent of automated/online lenders in the late 1990s (E-loan was one of the first). The reason? They couldn’t do purchases. And […]Read More

Funded Loan For Borrower IN Foreclosure; Sub-Prime’s Back In Good Way

We funded a loan yesterday for a buyer who is in foreclosure, and his rate was 4.875% (he put down 45%). His foreclosure involved a property in Hawaii that he thought he lost 6 years ago, but the paperwork was never processed properly so it lingers to this day (even though it is not on […]Read More

Flips Defined; Pay Off Consumer Debt to Qualify; Available Weekends!

A few reminders: 1. JVM Works Weekends. Here are a few quotes we got over the weekend from a favorite Berkeley Realtor: “Thanks for the speedy response!” and “Love working with a Lender who works on weekends. :)” We get similar quotes every weekend b/c real estate often takes place on weekends. We always have […]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