Archive for the ‘loans’ Category
Friday, December 1st, 2017
There is some good news on the real estate horizon for borrowers – the Federal Housing Agency (FHA) recently announced that the maximum conforming loan limits will be increased for Fannie Mae and Freddie Mac mortgages in 2018. High balance/super conforming maximum loan amounts in San Diego County will be $649,750.00 for single unit properties. (See below for all types of properties).
Maximum conforming loan limit for single unit properties across most of the country will increase to $453,100 in 2018. This is an increase from the current maximum of $424,100. Some counties will go up to $679,650 for single unit properties. Anything above this will be considered jumbo financing.
It is important to note that the above rates only apply to conventional loans, not to FHA and VA. But my mortgage professional tells me that those will soon change as well.
Here are the new Conventional Loan Limits for San Diego, California:
2018 Loan Limit – 1 Unit
2018 Loan Limit – 2 Unit
2018 Loan Limit – 3 Unit
2018 Loan Limit – 4 Unit
If you have any questions you can contact my mortgage broker extraordinaire, Elvin Wesley with Ranch and Coast Mortgage, at 760-580-1733.
Wednesday, January 11th, 2017
By Elvin J. Wesley, President and Broker of Ranch and Coast Mortgage Group
What a great way to start the week and 2017!!!
Monday morning HUD announced that it had achieved the balance of its statutory operational goals and as a result of that it requires a reduction of the Annual MIP charged. This exciting announcement from HUD yesterday morning that represents a 25 basis points improvement on most FHA Loans (not to interest rate, but to the Annual Mortgage Insurance Premium charged by HUD on FHA loans)
The Revised MIP schedule is effective for Endorsements of Mortgages with a Closing / Disbursement date on or after January 27, 2017. Closing / Disbursement date is defined as the later of the date of the signing of the Mortgage or the Disbursement of the Loan Proceeds as is entered in FHA Connection. Unlike changes in the past the change is effective based on the closing date and not the case number assignment date!
The Revisions applies to all FHA Title II Forward Programs excluding Mortgages insured under the National Housing Act section 247 (Hawaiian Homelands).
Here is a Summary of the changes
What does this mean in regards to $$…payment reduction when a buyer/borrower is purchasing a home?
Old â€“ $550K base loan amount based on 0.85% MIP = $389.58 per month
NEW Â â€“ $550K base loan amount based on 0.60% MIP = $275.00 per month
Thatâ€™s a $114.58 reduction in MIP payment, which means lower overall payment for buyers/borrowers and more BUYING power!
On November 23rd the Federal Housing Finance Agency (FHFA) announced that the maximum conforming loan limits for Fannie Mae and Freddie Mac in 2017 will increase, which of cources has now taken place. This will be the first increase in the baseline loan limit since 2006.Â In higher-cost areas, higher loan limits will be in effect as shown below.
This change has already taken place for FHA and VA loans limits as well.
2017 Conforming and High Balance Loan Limits-
SAN DIEGO NEW LIMITS $424,100 Conforming and $612,500 High Balance
LOS ANGELES NEW LIMITS $424,100 Conforming and $636,150 High Balance
ORANGE COUNTY NEW LIMITS $424,100 Conforming and $636,150 High Balance
*See attached spreadsheet for more counties and limits for 2-4 unit properties
|Number of Units
||Maximum base conforming loan limits for properties NOT in Alaska, Hawaii, Guam & U.S. Virgin Islands
||Maximum base conforming loan limits for properties in Alaska, Hawaii, Guam & U.S. Virgin Islands
High Balance/Super Conforming:
|Number of Units
||Minimum/Maximum Original Loan Amount
||Properties in Alaska, Hawaii, Guam & U.S. Virgin Islands
Please refer to the full County Loan Limits list attached or just contact Elvin Wesley at Ranch and Coast Mortgage
(CA DRE license: 01316249, NMLS: 234795):
f 866.683.5399 toll free
Monday, September 19th, 2016
I don’t know if it’s just bad luck, but I have been having MAJOR issues with lenders lately – messing up (and almost killing) escrows at the 11th hour. (I should say that these mistakes are not from MY preferred lenders, but from lenders whose clients are purchasing my listings). Here is what I know: lenders are held to high standards, most importantly they must check all paperwork and needed documentation during the buyer’s loan contingency process. Here are some of the dumb things that I have seen lately from buyers’ lenders:
1. Not checking buyer documentation. I had a lender this past week that on the day of the loan contingency removal deadline realized that there were two parties to a trust for which they based funds going into the loan. Now I have to assume that they had a copy of this trust for 21 days, and that they vetted it to make sure their borrower qualified. However, on day 21 I find out that they “just realized” that there were 2 trustees, not one, and therefore the borrower actually had half of the money to his name instead of the whole trust amount, on which they based approval.
This is unacceptable folks! These are basic inquiries a lender needs to make when processing a loan! How could the lender not have known the borrower’s stake in the trust when it should have had that trust documentation, which clearly identifies trustees and is a vital document when funds are coming from it?! Unbelievable.
2. Sending over loan docs with a change in borrower names. Believe it or not, a lender this past week sent over loan docs to escrow to be signed by the buyers, with closing slated for the following day (which happened to be a Friday so there was no room for screw-ups). The problem was that the docs had DIFFERENT buyer names than the contract/escrow documents – they basically eliminated a buyer! Now, I don’t know about you but it isn’t rocket science -Â it is pretty basic common sense that if you have a contract between parties, you cannot just change or eliminate the name(s) of a party without proper documentation (it also happens to be the law). Lenders KNOW this!
Suffice it to say that in this particular case escrow and I had to jump through hoops and the lender had to re-draw docs at the 11th hour. It was very stressful. This is absolutely unbelievable. The lender has copies of the contracts and all documentation relating to the purchase agreement. For them to do something like this is just crazy.
The moral of my crazy lender scenario week is that there are often problems in a real estate transaction, so prepare for them. But those who are charged with qualifying borrowers need to be much more careful. Things like this should not be happening. This past week was officially named by me “lender screw-up week.” I sure am glad those lenders that I work with are so on top of things, and hope to never work with either of these particular lenders again.
Sunday, March 2nd, 2014
Tuesday, March 26th, 2013
Sunday, November 4th, 2012
Bank of America issued a notice recently to agents about the possibility of selling off loans in the middle of a short sale, which could drastically affect your short sale (and even cancel it last minute). It is very important that both homeowners and their agents understand what is happening, before listing a property for short sale.
As is customary, many lenders sell loans, even those that are delinquent – this is nothing new. But the fact that B of A sent out a notice about it is concerning, because of the timing that is mentioned for possible sales. The notice states that while in the midst of a short sale, borrowers’ loans may be sold to other servicers. If that happens, there is no guarantee that the pending short sale will close. Here are the steps by which this may happen (as spelled out in the notice):
â€¢Â Bank of America will send the homeowner a letter 15 days before the servicing transfer date.
â€¢Â Bank of America may call the agent to advise of the impacts to the short sale.
â€¢Â The new servicer will send a letter or statement advising the homeowner where to send payments.
â€¢Â If an offer has already been accepted on your short sale, a closing has been set and an approval letter issued, the new servicer will determine if the short sale will continue. (Yikes – a little too much discretion here!).
The scary part is that B of A is giving itself an out – why would a lender approve a short sale, only to then sell the loan while the property is in escrow? This makes not sense whatsoever. B of A states, “Real estate professionals should advise homeowners that, similar to foreclosure, a servicing transfer is a risk that may occur at any time during the short sale process. This is why it is important to move as quickly as possible to facilitate the short sale.” Wow – if I have to tell this to potential short sellers, why would they want to risk a short sale? Why would a buyer want to risk making an offer, with the very real prospect of losing money and not closing? And why would I, as an agent, want to risk spending marketing dollars and time in selling the property? NO ONE WINS!
It seems to me here that B of A is trying to cover it’s behind, but this warning and the described act is contradictory to short sale approvals.
The solution here is this: if you have a B of A loan and are considering a short sale, you need to have your agent or negotiator discuss this with B of A before listing your home. I would ask to get something in writing that B of A will not sell the loan after the short sale has been approved and during the escrow period, up until the deadline that is provided in the approval letter. This applies whether you have a first or second loan with the bank. If B of A is not willing to do this, you can either take a risk or look into other options.
This move is a step in the wrong direction by B of A, and thus they remain on the top of my “lenders who are not cooperative” list. What a shame that this bank – Bank of AMERICA, for goodness sake, is not willing to truly help American homeowners. Maybe they ought to think about a name change.
Wednesday, October 24th, 2012
Friday, June 15th, 2012
Do you know the difference between a pre-qualification and a preapproval for a mortgage? Surprisingly, many buyers – and even many agents – do not. It is important to understand the difference before you prepare to search for a property.
Pre-Qualification: When a buyer gets pre-qualified for a mortgage, it means that s/he has submitted information to the lender regarding employment/earnings and assets. The borrower discloses what amount s/he has for a downpayment, and provides the lender with a credit score. Not much digging is done to verify the information, and pre-qual letters are fairly easy to obtain.
Some lenders require proof of funds to be shown (which can be done by submitting a bank/securities statement), and pre-qualification letters state that a loan will be granted based on the borrower’s ability to satisfy the conditions – they are not a guaranty for a loan. These letters are the most common types presented with offers, as many banks can evaluate a borrower, but cannot truly evaluate whether s/he can purchase a particular property until they have a fully executed contract and related documents.
Preapproval: Getting preapproved means that a lender took the time to look at a potential buyer’s documentation of income and assets. Credit scores are pulled, and the buyer is examined more thoroughly. Borrowers must provide 1099’s, W2’s, account statements, employment stubs and other information if necessary. Once the preapproval is drafted it is still not a guaranty that the borrower will get a loan. There are other conditions that must be met, which will become more clear once a property is identified for purchase.
No matter which type of letter is obtained, it is important to obtain one before writing an offer so that the buyer looks strong in the presentation. Many listing agents will not respond to offers unless there is a preapproval or pre-qualification letter submitted simultaneously.
Interestingly, most listing agents do not scrutinize whether a borrower submits a preapproval or pre-qualification letter (and I have found that many do not even know the difference), but many do ask that proof of funds (funds necessary to cover any downpayment) be submitted with an offer and the letter. None of these things provide iron-clad proof that the buyer will qualify for the loan, but they do reassure the seller and listing agent that the potential buyer at least looks positive on paper.
It is important in today’s market – where we are seeing many properties obtaining multiple offers – to look as strong as possible. Taking the extra time at the start to obtain a preapproval is a smart decision that could mean the difference between getting your offer accepted over that of another buyer.
If you are considering purchasing a home, it is important to consult with a mortgage professional right away, so that you can figure out for how much of a loan you will qualify. This will allow you and your real estate agent to focus on properties in the right price range, providing a better chance that you will be able to successfully qualify for a loan when you find the right home.
Images courtesy of Dreamstime
Friday, December 16th, 2011
In the last several months I have seen my investor clients face some big challenges in purchasing condominiums. I have had two sales almost fall apart in the 11th hour – luckily both buyers were able to close with cash at the last minute. There are a few roadblocks investors need to watch out for if they are considering condo investments.
1.Â Owner occupancy rates below 51%. This issue is the most frustrating. In order to get a loan a complex must have an owner occupancy rate above 51%. Many complexes in the lower price ranges do not, and they are magnets for cash investors because of the low prices. If your investor needs to get a loan the lender needs to establish the occupancy ratios. The problem is that many times the information from the property management company confirming this is not received in a timely manner.
No matter what the reason, this is becoming a bigger problem for investors who need to obtain loans to purchase income property. I spend a lot of time conferring with my title representative to get owner occupancy information for complexes BEFORE I write offers. But today a mortgage colleague pointed out to me that the title companies may not have the most current information, and that I need to obtain that from the management companies. This creates another issue – many of these companies charge for this information, sometimes around $50. So who is to pay this money – the Realtor, the buyer? What if you have to research 5 or 10 different complexes to find one that will work…this could add up to a lot of money out of pocket.
There simply has to be a better way to find out this information, other than writing an offer and wasting everyone’s time (plus taking the property off the market, which precludes other offers the seller may have been able to obtain during that time).
2.Â HOA lawsuits. This is another sale killer, and one that an investor client of mine just experienced – luckily she too was able to close with cash. The problem here is when the HOA is named as a defendant in a lawsuit, the lender likely will not issue a loan on the property. In my case, the HOA was suing a former owner for back HOA dues, and he in turn countersued the HOA, claiming it told him his dues would be waived in lieu of doing some construction work on the complex for the HOA. Apparently this was never in writing, so it could be a frivolous suit, but the lender still sees it as a suit against the HOA, which makes it a risky loan. It is unfortunate they cannot look at individual circumstances, but that of course would be time consuming.
3.Â Too many mortgages. If an investor buyer has several mortgages s/he may have problems with financing a subsequent property. Buyers and agents need to speak with mortgage professionals before writing any offers, to make sure they understand whether they will qualify for another loan. Even so, I had one investor buyer who was told he would qualify, and in the 11th hour it did not work out. You need to be careful and allow time to research these things.
If you are an investor buyer, or if you are a real estate agent who works with one, you need to be careful and discuss these potential pitfalls with your client(s), as they can definitely create problems. Best to be prepared and try to gather as much information as possible before your client makes an offer. If you have any stories of failed investor purchases please share them below.
Friday, November 18th, 2011
It is official – Congress has voted to bring back the higher FHA loan limits. The measure, once signed by the President, will push the FHA conforming loan limit in the highest priced real estate markets (like California and New York) to $729,750 through 2013. The current limits cap at $625,500 in these markets; they were cut back as of October 1, because of Congress’ failure to extend them.
The limits had been temporarily raised for FHA and Fannie and Freddie during the financial crisis, when it became more difficult to obtain loans from banks.What does this mean for buyers? In the higher priced markets, it means buyers can get higher loans with lower downpayments, a move that prevents them from being locked out of certain neighborhoods due to lack of extra cash.
The new extension applies only to FHA loans, not Fannie and Freddie. FHA, which is a mortgage insurer (not a lender), provides mortgage insurance to buyers who do not have large enough downpayments to obtain prime loans. Borrowers with FHA loans can put as little as 3.5% down on the purchase of a home.