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

When 6.875% Is a “Low Rate” Online Notary Service Too

ONLINE NOTARY SERVICE We learned about an online Notary service today that can notarize documents for almost anyone at any time from anywhere. This is something we will take advantage of often, and you can check them out at Notarize.com. Sadly, this service will replace many mobile notaries and signing services. This is one more […]Read More

Why It Is So Hard to “Roll Down” a Locked Interest Rate When Rates Fall

Every borrower of course wants the best of both worlds – they want to be fully protected by a “rate lock” if interest rates go up, but they also want to roll down their rate if rates fall. This puts all mortgage lenders in a very difficult situation. I am going to over-simplify this a […]Read More

Don’t Fear the Onslaught of Big Tech in Real Estate and Mortgages

I know of three major fintech players that devoted tens of millions into building out mortgage lending operations over the last four years. And, all three are NO longer in business. I know those companies intimately b/c my wife Heejin and I visited all three, and two of them actually came to us asking how […]Read More

“PMI” or “Private Mortgage Insurance” Explained (Briefly)

PMI remains a great option for high-LTV financing in 2019, and all too many borrowers and agents do not fully understand how it works. First of all, PMI protects lenders (not borrowers) in the event of default. So borrowers with PMI will still be on the hook or liable for their mortgage debt even after […]Read More

“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