Posts

“QE 3” Announced – Lowers Rates

QE 3 is short for Quantitative Easing, Round #3. This is a policy where the Fed buys up debt instruments or assets in an effort to push down long-term interest rates. The Fed’s hope is that lower long-term rates will stimulate the economy by giving consumers and businesses an incentive to borrow and invest more […]Read More

Rescission Periods – 3 Days For Primary Residence Refi Only

A “Rescission” Period is a mandatory “cooling off” period between the date someone signs loan documents and the date a loan can fund. There is NO rescission period for purchases, or refinances involving 2nd homes and/or investment properties. Only a refinance of an owner occupied primary residence requires a rescission period. Prior to the late […]Read More

Options For Investors Buying “Fixer Uppers”

Investors looking to buy “fixer uppers” that are in poor condition have only a few options. Hard Money or Private Money/30%+ Down: These lenders do not care about condition, but they do require 30% down or more, and their rates are in excess of 10%. In addition, they charge from 3 to 5 points. Fannie […]Read More

Loan Over $417,000? 2 Options: 10% Down or 3.5% Down FHA

If loan amounts are under $417,000, buyers can get conventional financing with as little as 3% down, as well as FHA financing with 3.5% down. If loan amounts are over $417,000, however, buyers still have only two options: conventional financing with 10% down or more, or FHA financing with 3.5% down. This is an important […]Read More

Call Extra/Unpermitted Units “Storage”

We have two retired borrowers refinancing their property in Berkeley – a quaint older home with an in-law in back. The in-law unit is a cute little, detached cottage that does not detract from the property in any way, and it also generates $900 per month in rent. The cottage itself is in great condition. […]Read More

Wells Fargo Pulls Out of Wholesale – No Concern for Us

Wells Fargo Bank pulled out of the “wholesale arena” yesterday, meaning they will no longer accept mortgage loans directly from brokers. They will, however, continue to buy loans from “mortgage banks” that underwrite loans on behalf of brokers (this is called the “correspondent channel”). Banks like Wells like this channel because they can buy loans […]Read More

Lock Now While “Getting is Good” & Refi Again in 120 Days

As the world economies all continue to soften and rates continue to fall, many borrowers are reluctant to lock hoping for a lower rate tomorrow or next week, or next month. There are several things such borrowers need to consider. First, for borrowers purchasing a home, a reluctance to lock is a problem because we […]Read More

80% of Mortgages = Refi’s, But NOT at JVM; Purchase Experts

Industry-wide, mortgage refinances comprise almost 80% of all volume. That is most definitely not the case at JVM. Refinance transactions are much simpler to perform, requiring far less expertise than purchase transactions. There are many firms that focus almost entirely on refinances and those firms will make a lot of money in the near-term. But […]Read More

Investor Options for Buying Real Estate; Pay Cash and Refi; 75% LTV Refi

Because we get so many repeat questions from investors, we thought we would address investor options again. Investors can pay cash for properties, and refinance immediately afterwards for up to 90 days. If they wait until after 90 days, they miss “the refi window,” and have to wait a full six months from close. There […]Read More

Adding Back Non-Cash Items – Income Higher Than Appears

Many borrowers have more income than they realize because we can add back “non-cash items” or tax deductible expenses that never actually came out of a borrower’s pocket. These expenses are usually depreciation and amortization. Borrowers with any type of hard assets or real estate (or partnerships or corporations with hard assets or real estate) […]Read More

“Friendly” Appraiser Coaching Once Again

We had a transaction recently with a $410,000 price, but the most recent “model matches” sold for $370,000 or less. This of course made the appraisal a real concern. Fortunately, the realtors involved were very smart and affable, and they did a masterful of job of providing data to the appraiser and assisting the appraiser […]Read More

NO “Stated Income” Loans Per Se

In the years 2002 to about 2007, borrowers with little verifiable income and credit scores as low as 580 could get “stated income” loans with no money down. In other words, borrowers could obtain 100% LTV loans, with no verifiable income and sub-par credit. Those days are gone for good, but borrowers looking for “no […]Read More

Why “Business Bank Statements” Are a Problem

We frequently get small business owners or professionals (often lawyers) who use a business bank account for both business and personal use. This is problematic for several reasons. First, as most people know, every large deposit (over $500 or so) has to be paper-trailed and explained. And most business bank accounts have a very large […]Read More

Rates Improve Marginally; No “Personal Property” In Purchase Contracts; Addendum

30 Year Fixed Rate Loans at a Cost of One Point: 3.5%* Rates improved slightly today after weekly jobless claims came out worse (higher) than expected. This negative news signaled more weakness for the economy and again shifted investors from stocks to bonds. Mortgage lenders only want to finance the purchase of real estate, not […]Read More

Illegal Units OK; Can’t Use Income from Them

In older communities, there are numerous properties with illegal or un-permitted units -either stand-alone or attached “in-law” set-ups. Many of our lending sources allow un-permitted units as long as they are built in a workmanlike manner. However, lenders do not allow value to be attributed to them (in most cases), and they do not allow […]Read More

Do NOT Need “Landlord History” in Most Cases; Rental Income

A borrower contacted us yesterday after he was denied financing by his bank. The borrower is buying a new home, and renting out his current home. The borrower cannot qualify for a new home without using the potential rental income from his current home to help qualify. His bank, however, told him he was not […]Read More

FHA Turn Times = Conventional; Rate “Roll Downs”

Two Realtors asked us yesterday if we could close an FHA transaction in under 30 days. We of course said “yes” becuase it takes no more time to close an FHA transaction than it does to close a Conventional transaction. We are not sure why people think FHA transactions take longer. The appraisal and underwriting […]Read More

TRAINING – Never Too Late; Never Enough; Great Story

We were at a Marketing and “Best Practices” seminar last week, put on by three partners who own and operate mortgage and real estate firms (so they “practice what they preach”). The seminar immediately started off with a whole litany of great ideas with respect to managing and marketing, and there was a gentleman sitting […]Read More

Market Is Hot! Appraisers Are Not! Valuation Issues?

Because the market is as hot as it is now in many areas, we are having appraisal issues. Many appraisers are too unmotivated or too ignorant to correlate to the “current” market by pointing out the number of multiple offers or by making a case for the use of pending sales for “comps”. We understand […]Read More

Renting vs. Owning? Record High Market Rents & Tax Savings

With rental rates near record highs, we are frequently asked to tout the benefits of buying over renting. With interest rates so low and the tax benefits so high, it is not difficult to make the case for buying. Below is a general example for a hypothetical $700,000 purchase. We are happy to provide more […]Read More

“Seasoning Periods” After Short Sale With Late Payments; 2 Yrs?

After we reminded everyone yesterday about borrowers being able to buy immediately after a short sale if there were no late payments, we had many questions again about seasoning periods after a short sale with late mortgage payments. For FHA financing, the seasoning period is 3 years. For VA financing, the seasoning period is 2 […]Read More

Rates Hold; 70 Days to Close at Major Banks, Per WSJ Cover Story

The Wall Street Journal had a cover story today about how backed up the major banks are with mortgage business. Bank of America actually told a customer to come back in 60 to 90 days to just start the process. The average time it takes to close a transaction at a major bank is 70 […]Read More

Appraiser Calls Out Repairs – Often Not That Serious

Appraisers frequently call out repairs of all kinds, and for some reason it has been happening more often lately. Examples include: (1) a rickety outside stairway that was a “health and safety” concern; (2) un-strapped water heaters; (3) peeling paint; (4) broken windows; (5) excess debris around the house; (6) broken roof tiles; (7) broken […]Read More

SUMMARY OF APRIL “COMMENTS”; “Month End” Summary

Below is another in our series of “month-end” summaries. EVENTS AND INFO REGARDING REAL ESTATE FINANCE JVM LENDING APRIL OF 2012 – MONTH-END SUMMARY Below is a summary of some of the topics covered in JVM Lending’s April’s “Daily Comments” 1. Rates Come Back 1/4 percent. Rates decreased at least 1/4 of one percent on […]Read More

The Need for Speed; Borrowers Must Race to Get Us Everything

Borrowers in contract often get overwhelmed with requests, paperwork, disclosures and decisions, and they want to take time to think about things. Unfortunately there is simply no time. The loan approval process is very complicated with numerous steps and everything needs to get rolling immediately if we are to close on time. We need loan […]Read More

Condo Financing – Things Lenders Need to Know; Issues

Financing for condominiums can be tricky because so many issues can arise. We do have financing for “unwarrantable” condominiums, but the interest rate for such financing is substantially higher than the rates for Conventional or FHA financing. To get Conventional or FHA Financing, here are the questions that need to be answered: 1. Is the […]Read More

Interest Rates Go Either Way in “Election Years”

One of our borrowers on Friday suggested that we hold off on locking his rate “because rates go down in election years”. This is a prevailing myth that we address every time there is a Presidential Election looming. Rates do not always go down or stay low in election years. According to a WSJ article […]Read More

Will Rates Dip Again? Unexplained Deposits – No Mas!

Will Rates Come Way Back? There is even talk that rates may dip back to previous lows, for two reasons: (1) There is evidence that the U.S. Economy may in fact hit the skids again soon. The following link to a CNBC report supports this: http://www.businesscycle.com) ; and (2) Troubles in Europe are mounting once […]Read More

Investor Financing Options

We are asked about investor financing options so often that we thought it was time to repeat them. For loan amounts below $417,000: 15% Down: Investors can put down as little as 15%, but the PMI rates and interest rates are so high, it simply makes more sense to just put down an extra 5%. […]Read More

SUMMARY OF MARCH “COMMENTS”; “Month End” Summary

EVENTS AND INFO REGARDING REAL ESTATE FINANCE JVM LENDING MARCH OF 2012 – MONTH-END SUMMARY Below is a summary of some of the topics covered in JVM Lending’s March “Daily Comments” 1. Rates increased 1/4 of a percent in March. Rates increased at least 1/4 of one percent on average in March. Positive economic news […]Read More

FHA MI Going Up; Keep LOWER Rates to Apr. 9; 15 Year FHA w/ NO MI

We mentioned several times that FHA Mortgage Insurance (MI) Rates are going up significantly in April. Many lenders made April 1st the cut-off date, but we now have several lenders allowing us to order FHA Case #’s as late as April 8th or 9th in order to preserve the lower MI Rates. For most FHA […]Read More

What NOT To Do After Getting “Pre-Approved”? No New Car; Same Hours

We had buyers get pre-approved a few months ago with very tight debt ratios. Mr. Buyer was paid on a salary, and Mrs. Buyer was paid “hourly”. Issue: Mrs. Buyer took two days off from work without pay (because she was paid hourly), and the reduction in income pushed her debt ratios too high to […]Read More

Lenders Correlate to Borrower with Lowest Score No Matter What

A borrower with very low credit scores (in the 620s) explained to us yesterday that we do not need to worry about her low credit scores because she has “a co-signer with excellent credit.” This is a common misconception among borrowers – that co-signers or co-borrowers with excellent credit will somehow “offset” borrowers with weak […]Read More

The Fed Does Not Control Mortgage Rates

Last week we were coaxing a borrower to lock several loans before rates climbed further, and he said: “I want to wait because I think they will realize that they pushed rates too high and then bring rates back down”. This borrower is a smart man who owns a large and very successful company, but […]Read More

Beating the “Flip” Dead Horse Again

A “Flip” is a property that was purchased by the current seller within the last 90 days. Many, if not most, lenders will not lend against “Flips”. We still get so many questions regarding Flips that we are addressing them again today. 1. Bank REOs do not count. If a bank or a mortgage trustee […]Read More

CHDAP Down Payment Assistance Gets Better; Only 1/2% Down!

Our best Down Payment Assistance program just got better. CHDAP now allows an FHA, 96.5% LTV First Mortgage in front of the 3% CHDAP 2nd. Borrowers now only need come up with 1/2% of the purchase price for a down payment. This 1/2% can be a gift too. (CHDAP formerly only allowed a 96% LTV […]Read More

401K Loans – Seasoned Funds & Payments Not Counted in DTI

We often have borrowers who have both very high debt ratios and tight cash situations. Such borrowers often ignore a great source of additional funds for both down payments and closing costs: 401K Loans, or money borrowed against one’s 401K/Retirement account. 401K loans are deemed “seasoned funds” even if the loan proceeds hit the borrower’s […]Read More

Declining Income Is a Big Issue Now – Beware

We have issues time and again with “declining incomes”. Lenders are very concerned about this issue b/c of our recessionary environment. If a self-employed borrower has income that declined from 2008 to 2009, not only will the lender only correlate to the 2009 income (in lieu of averaging 2 years), the lender will also require […]Read More

Loan Limits Remain $729,750; Seller Paid Up Front MIP

Congress extended the “Temporary Loan Limit” of $729,750 through 2011. This is good news for those of us in the Bay Area where housing prices are so high. This news, however, was probably met with a yawn from brokers in Topeka, Kansas. FHA Up Front Mortgage Insurance Premiums (Up Front MIP) go down on Monday […]Read More