Posts

What Constitutes a “Bedroom?” Ceiling Height? Closet? County Records Wrong!

My wife Heejin spoke in front of a brokerage recently and an agent approached her afterward to complain about a transaction we closed over three years ago. The agent was still upset b/c the appraisal came in low. We researched the transaction and found out that the county records and the MLS had the bedroom […]Read More

Do Homebuyers in California Need An Appraisal For The Home They’re Buying?

The Short Answer: Unless you plan on paying all cash for your new property, you will most likely be required to have an appraisal done. Why do I need an appraisal? Appraisals are used to determine the current market value on a home. Appraisals are also used to determine a home’s resale value. Lenders usually […]Read More

Mortgage Debt Relief Act Expires 12/31/12

The “Mortgage Debt Relief Act of 2007 is set to expire on 12/31/12. For many Realtors, this is old news. But we have borrowers still in the dark about this, so we are addressing this today. Prior to the Mortgage Debt Relief Act, the discharge of debt from a short sale, loan modification or foreclosure […]Read More

Letters of Explanation – an “Art”; Need for Smart Mortgage Analysts

Despite all the rules and regulations imposed on the mortgage industry, there is still a major subjective aspect to getting loans approved. Underwriters “on the fence” are often swayed one way or another solely by the strength of a formal “letter of explanation”, explaining away derogatory aspects of borrower’s credit package. We referenced a file […]Read More

Broker vs. Bank? Broker Wins – Examples Below

A few weeks ago, one of our Realtors frantically called b/c the purchase of his listing blew up after 30+ days in escrow. The buyer’s lender, a direct-lending “bank,” had pre-approved the buyer. But at the 11th hour, the lender/bank denied the loan b/c the buyer had too little savings and late payments after a […]Read More

“Charming” the Appraiser to Get Value

We have a $915,000 FHA Purchase of a Duplex in Rockridge (Oakland). The appraisal was a huge concern because there are few comparable sales to “bracket” the upper end of that market. The buyer’s agent, however, met the appraiser at the property and pretty much charmed the daylights out of her, doing everything short of […]Read More

Irrational Underwriters – Unforeseen Conditions – Loan Buybacks – Paranoia

We take great pride in our ability to spot issues up front. BUT, unfortunately, we operate in an era of underwriter-paranoia. The reason: Fear of Loan Buybacks. Major investors and Fannie and Freddie all can and do demand “Buybacks”; they can force the lender that originally funded the loan to buy back a loan if […]Read More

Fed May Step Back into the Market; Rate Float-Downs

But the question remains, with respect to the Fed stepping back in, why? The Fed’s presence (in buying up mortgages) was necessary in 2009 to maintain demand for mortgages, but, as it stands now, there is ample demand for mortgage-backed securities. In addition, driving rates even lower may not spur further demand for refi’s b/c […]Read More

Appraisal Horror Story

Appraisal Horror Story We have a $285,000 purchase in an especially depressed area. We thought there would be no issue with the appraisal because the most recent comp was a “model match” that sold for $315,000, and it was clearly in inferior condition. We under-estimated the appraiser’s laziness, and he came in $20,000 LOW. The […]Read More

“Coaching” the Appraiser Works (if done respectfully)

We have had good luck “coaching appraisers” lately. BUT, the coaching has to be very respectful and professional, with the offering of pertinent information and data. Derision and blatant requests for a specific number get us nowhere. Remember, generally speaking, appraisers need comps that closed within 90 days of the inspection date; that are not […]Read More

Energy Efficient Mortgages – Great Tool for Repairs

EEM Mortgages are a great tool to do ANY so-called “energy efficient improvements” to a home, including installing new windows, new furnaces, new doors, new insulation, etc. $8,000 for such improvements can be added on to an FHA loan irrespective of the resulting LTV. The work does not have to be done before close, as […]Read More

FHA Repairs/Concerns; We (JVM) Can Pay For & Do Repairs

FHA Appraisers do not care so much if properties are “old or tired” looking. They test appliances for working order; they look for “Health and Safety Concerns” (is water heater strapped down), and they look for major deferred maintenance (dry rot, leaky roof, etc.). FHA appraisers are not significantly worse than conventional appraisers with respect […]Read More

Rates Improve Slightly; Our Best Appraiser Thinks “STAGING” Effective

Our most experienced appraiser is in constant contact with us, frequently sharing his market observations. Over the last several months, he has been appraising numerous “Flip” properties at the lower end of the market. He concluded recently that investors who aggressively “stage” their “Flips” get much higher prices for their properties (than those who do […]Read More

“Yield Premium” for Repairs or Fees

We have a transaction in which we are using our “yield premium” or commission to pay for about $8,000 of repairs. The seller won’t do the repairs, and the buyer cannot afford to do the repairs, so we increased the rate to get more commission. We then agreed to credit the commission to the contractor. […]Read More

FHA Rules/Dates Again; Spot Approval; Appraisal; MIP Increase

FHA Down Payment: An increase to 5% Down does not seem likely for FHA loans according to several of our lenders. Using our OWN Appraisers: If FHA Case Numbers are ordered on or after Feb. 15th, we are subject to HVCC appraisal rules. This is serious, as our super-skilled appraisers have saved many FHA deals […]Read More

Great “Fence Sitter/Tire Kicker” Story

There was a great Fence Sitter/Tire Kicker story in Monday’s Wall Street Journal. It featured a woman in Marin County named Ms. Pringle who spent over two years viewing 298 homes, much to her Realtor’s frustration. (The average time a buyer spends looking for homes is just over 10 weeks, according to the article). Anyway, […]Read More

Energy Efficient Mortgages (again) – Great Way to Finance Improvements; Limit Is Now $17,650

We mentioned Energy Efficient Mortgages (EEMs) a few weeks back. These loans consist of additions to principal that can be tacked on to FHA Loans at the same rate as the base FHA Loan, irrespective of the resulting LTV. EEMs were capped at $8,000, but now a few of our lenders allow as much as […]Read More

Homeownership Is Better Than Renting Now

Hence, we can expect a lot more foreclosures to hit the market, and those of you in the first time homebuyer market will likely stay busy for quite some time. And, those of you not in the first time homebuyer (or investor) market might want to consider jumping in. Barney Frank stated recently that there […]Read More

Market Volatile; Appraisal Issues Galore; HVCC Guides May Disappear

The other issues we are battling right now involve appraisals. Many of our current purchases are at prices higher than most of the recent closed sales in the subject property’s neighborhood. Fortunately, most of these transactions involve FHA financing so we are able to work with our appraisers directly. They call us to discuss potential […]Read More

Banking Crisis

Rates got marginally worse because money moved out of bonds and back to a moderately stabilized stock market. In case anyone wants to understand the nature of our current banking crisis, we highly recommend an episode from the “This American Life” radio series on Public Radio; we found it both fascinating and informative. It explains […]Read More