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

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

Condo Issues: Concentration? Delinquent HOAs? Oakland Tribune Bldg :)

First, unrelated to anything, if any of you appreciate the Oakland Tribune Building as much as I do, here is a great podcast discussing it: http://99percentinvisible.org/episode/tube-benders/ Secondly, we have had condo deals below up recently b/c of HOA issues – one involving “concentration” (one entity owns more than 10% of units, and another involving delinquent […]Read More

Top Five Influences On Mortgage Lending In 2015

As I am seeing “top five” (or ten) lists everywhere right now, I thought I’d publish my own. Here are the top five influences (in my brain at least) on mortgage lending in 2015. 1. LOW RATES PART 6 (“Part 6” b/c rates have remained low for a shockingly long six years). Rates stayed so […]Read More

Title Insurance; Owners Policy Too Cheap Not To Get

The new TRID requirements have language that reminds buyers that they do not need to buy an “owner’s policy” when it comes to title insurance. So some borrowers are opting out, and title companies are pulling their hair out b/c the “owner’s policy” is ridiculously cheap when purchased with the mandatory “lender’s policy.” The “owner’s […]Read More

Inflation Concerns Explained – How They Affect Real Estate

The Fed is expected to raise short term rates this month b/c employment numbers are adequately strong. But, one area that remains a concern is inflation, or the lack thereof. The Fed actually desires a little inflation, and they do not understand why there is so little. The WSJ had an article this morning on […]Read More

“Uberization” Of Everything Is Inevitable; Be Ready; Lending?

When I landed at JFK Airport in New York last week, I called Uber and my driver actually worked for a large ride-service company. The company had signed all of its cars and drivers up for Uber. This is a great example of a company adjusting to a technology change that is wiping out many […]Read More

Veterans Day; Most Lenders/Lock Desks Closed; Something Positive

JVM Lending is closing today at Noon, and our Mortgage Banking arm is closed altogether. Here is some positive news to brighten up this Veteran’s Day. The outlook for a continued robust purchase market is extremely good. This is b/c so many “millennials,” who have been sitting on the sidelines and not buying homes, are […]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

Closing TRID Loans Already; The Sky Didn’t Fall (again)

We are already closing TRID loans, even though TRID just went into effect on October 3rd. This shows that much of the TRID fear was overblown, as I mentioned in previous comments. We closed our most recent TRID loan in under 20 days. It takes 4 to 7 days longer to close a TRID loan. […]Read More

Realizing Tax Benefits From Buying Now By Increasing Exemptions

Many lenders and Realtors tout the tax benefits from buying a home b/c buyers can deduct their interest and property taxes from their income after they buy. For buyers in high tax brackets these tax savings can work out to be over $1,000 per month in high end markets. This is a very important consideration […]Read More

TRID: Longer Escrows; Contingencies The Same

This is a reminder that transactions that are “disclosed” after the October 3rd TRID implementation require about 7 more days to close. BUT, contingency periods remain the same. We can still release appraisal and loan contingencies in 8 days. TRID does not slow down contingency periods. One more important reminder: If you make meat-chili, you […]Read More

TRID Again: 21 Day Close; Nobody Can Change Fees or Credits

Now that we are getting our arms around TRID, we realize that a 14 day close will be impossible. The best case will be 21 days. This is b/c we cannot issue the required “Closing Disclosure” until 7 business days after we issue our initial disclosures that include the “Loan Estimate.”  And, it takes us at least 3 to […]Read More

Unpermitted Space: No Value; No Gross Living Area; No Stove; Bath OK

Un-permitted space (including baths) and improvements are usually allowed. Here are a few guidelines: Appraisers cannot give value to the space or count it in gross living area or room-counts. A house with permitted 3 bedrooms and 1 bath is still a 3/1 from an appraiser’s perspective even if it has 2 extra beautifully finished baths with no permits. […]Read More

Post TRID Turn-Times; Contingencies Same; COE 7 Days Longer

As mentioned, now that TRID is in effect we are requesting 21 day escrow periods instead of our usual 14 day escrow periods. We are working to move back to 14 day closings as soon as possible. TRID, however, is not affecting contingency periods. We are still 8 days for loans and appraisals. We can […]Read More

TRID Again; Contingencies & Closing Periods For Contracts Now?

Realtors are asking how they should adjust closing periods and contingencies with TRID coming into effect on Saturday. Some lenders are telling Realtors they need 45 days to close b/c of TRID, and we have no idea why; those lenders must have monks in back rooms copying loan documents with quill pens on parchment paper. […]Read More

Collateral Underwriter & Appraisal Reviews; Bad News/Good News

Last winter when Fannie Mae’s Collateral Underwriter surfaced, there was panic (and yes, it was panic) in the industry about what it would do to appraisals and closing-times in general. The panic of course turned out to be overblown and unjustified. The situation was much like TRID is now. Our industry seems to face many […]Read More

No More CHDAP; Down Payment Assistance Program Alternative

The CHDAP (California Homebuyer Down Payment Assistance Program) was discontinued last week, and we were happy to see it go. It allowed borrowers to purchase properties with a tiny down payment of 1/2% of the purchase price, but it was cumbersome and slow to close (making it very hard to get offers accepted). Also, it […]Read More

TRID Explained Again; Not That Serious; A Few Days of Delay

TRID goes into effect on October 3rd, as most people know. TRID replaces the “Good Faith” and “Truth In Lending” with a new document called a “Loan Estimate.” The Loan Estimate is easier to read and is probably an improvement over the current documents. The other document that TRID requires, that is the cause for […]Read More

What Is With 80/10/10?

We are getting many questions about “80/10/10” financing lately. “80/10/10” stands for an 80% loan-to-value (LTV) first mortgage, a 10% LTV 2nd mortgage, and a 10% down payment. The purpose of getting two mortgages with 80/10/10 financing as opposed to one mortgage to 90% LTV is twofold: (1) borrowers avoid PMI by keeping their primary […]Read More

BK’s & FHA Financing; 2 Years Seasoning Unless In Chapter 13

FHA requires only two years of seasoning from the date a bankruptcy is discharged. This is relatively well-known. What is not well known is that borrowers in a Chapter 13 bankruptcy do not need any seasoning to qualify for FHA financing, as long they have a one year history of timely payments to the bankruptcy […]Read More

Need Income History No Matter How Well Doing Currently

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

Big Changes In FHA! Or Not…

FHA made a large number of changes in underwriting guidelines recently and Realtors are asking how this will affect buyers. For about 99% of our FHA buyers, the changes will have no effect. Some of the changes include: • Deferred loan student loan payments must now be counted in ratios. • For newly rented properties […]Read More

Why’s It So Hard to “Fund” A Loan? Salability & Cash to Close

We often have borrowers and Realtors wonder why it takes lenders so long to fund a loan after all the documents are signed. First, the entire funding package has to be returned to the lender. Upon receipt of the package, the “funder” has to review the entire package with a fine toothed comb to ensure […]Read More

Reminders: 60 Day Rent Back OK; Owner Occupancy Ratio For Condos

A couple quick reminders: 60 Day Rent-Backs are almost always allowed. Owner-occupant buyers must take possession of a property within 60 days, or they will not be allowed to garner superior owner-occupied financing terms. Owner-occupancy ratios in condo complexes are irrelevant if a borrower is buying as an owner occupant; ratios can be well under […]Read More

How To Skirt Condo Issues With “Limited Review”

Yesterday’s blog outlined potential concerns when financing a Condo. There is a tactic to skirt the concentration issue, when one party or entity owns more than 10% of the units. A strong borrower who puts at least 20% down can garner a “Limited Review” Approval with a select number of our lenders. This type of […]Read More

Rates Way Down, When They Are Supposed To Be Up? What Is Going On?

Rates have dropped precipitously in recent days b/c of the global sell-off in stocks. Once again, weak economies worldwide are spooking investors and causing them to sell stocks and move to bonds en masse. When investors move to bonds, the price of bonds increases b/c of increased demand, and this pushes yields and rates down. […]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

Non-Conforming Property; Need Zoning OK & “Burn Letter”

We often get asked about “non-conforming” properties, such as residential properties in areas that are zoned commercial, or multiple units on one lot with ambiguous zoning. Residential lenders will not lend against properties that have commercial use. They will, however, lend against non-conforming properties (properties that are not typical for the area), as long as: […]Read More

Can’t Use Business Funds For Down Payment w/o CPA Letter

This is a reminder that lenders do not allow borrowers to use business funds (from any “business account”) towards a down payment or closing costs, unless borrowers can get a letter from their CPA that states the withdrawal will not adversely impact the business. CPAs, however, rarely provide such letters now days b/c of the […]Read More

TRID/New Reg’s Not In Effect Until October; Not Serious Anyway

TRID or the new disclosure rules continue to strike fear in the hearts of everyone, and they shouldn’t. First, most lenders are not implementing TRID until October (August 1st is no longer the deadline). And second, the new disclosures are not that much more complicated (some are better), and they will not cause the massive […]Read More

Rules For Gift Funds

We have a few borrowers right now navigating the best way to receive gift funds, so we wanted to provide a few reminders. Gift Funds – a Few Rules of Thumb For FHA Loans – An entire down payment can be a gift. FHA Gifts must be “sourced;” this means that the donor or “gifter” […]Read More

JVM’s “Fast Fourteen” Day Closings; How and Why We Offer Them

We are renowned for our ability to close purchases in 14 days. Our lightning fast closings make offers far more competitive (essential in today’s market). We can close so quickly b/c we have highly polished, airtight systems in place. We do, however, need the help of everyone involved – Realtors, Escrow Officers, Borrowers, and Appraisers. […]Read More

Borrowers, Buyers, Sellers Must Have “Sound Mind”

We currently have an escrow that is completely stalled b/c the seller does not have a “sound mind” and is not capable of handling his affairs. The seller’s family likely “helped” the seller docu-sign the purchase contract and they probably thought they could “help” with all the signatures throughout the transaction. They did not realize, […]Read More