Archive for the ‘Mortgage News’ Category

Non-Occupant Co-Borrowers

More and more borrowers are being approved for their new home purchase and refinance loans by utilizing the income of a non-occupant co-borrower. The most common reason for this is to reduce the primary borrowers’ debt-to-income (DTI) ratio to below 43% to save the loan from a Non-QM (Non-Qualified) program, thus better pricing, interest rate, etc. The same effort can be made to get the DTI below 50% – 55% to keep the loan alive and within the standard of the Ability-to-Repay rule (ATR).

Different lenders can have their own unique guidelines, especially portfolio lenders in that they underwrite per their own in-house guidelines and to that point, aren’t obligated to sell the loan to a pre-determined financial institution.

Most lenders require that the loan is for a single family residence (SFR), owner-occupied to a maximum loan amount of $2,000,000 and loan-to-value (LTV) of 85%. Reserves requirement is increased to between 3 to 6 months reserves depending on the overall qualifications of the borrower and co-borrower. Available liquid assets required for down payment, closing costs including reserves do not have to come from the primary borrower. These monies can come from the non-occupant co-borrower or be a combined contribution from both borrowers. The additional borrower must be an immediate family member.


Most common Loan Officer Errors

This is good information for both borrowers and Loan Officers.

According to one of our most popular lenders, the largest instances of recent errors were:

  • Debts/liabilities, followed by income calculations
  • Debts omitted incorrectly (to be paid at closing but not on the CD, over 10 payments remaining, or the debt is more than 5% of the income on an FHA loan)
  • Undisclosed debts on pay stubs and bank statements not addressed
  • The PITI on REO’s were not fully documented or calculated (taxes, insurance, etc.)
  • Investment (or 2nd home) transactions where the borrower rents – the primary residence rental liability was not documented
  • The Income worksheet was not completed fully/correctly and an incorrect income was used (YTD, bi-weekly vs. bi-monthly pay, etc.)
  • Self-Employed income not calculated correctly – meals/entertainment not addressed, K1 income used to qualify, but no distributions were reflected on the K1 and a liquidity test was not performed, etc.

Non-Occupant C0-Borrower

More and more borrowers are being approved for their new home purchase and refinance loans by utilizing a non-occupant co-borrower. AKA, “non-owner occupied co-borrower” The most common reason for utilizing a non-occupant co-borrower is to reduce the primary borrowers’ debt-to-income (DTI) ratio to below 50%. Exceptions made to 55% with compensating factors such as available reserves, length of employment, credit depth among others.

Different lenders have their own unique guidelines. However, most require that the  loan is for a single family residence (SFR), owner-occupied to a maximum loan amount of $2,000,000 and loan-to-value (LTV) of 85%. Available liquid assets required for down payment, closing costs including reserves do not have to come from the primary borrower. These monies can come from the non-occupant co-borrower or be a combined contribution from both borrowers. The additional borrower must be an immediate family member. Reserves requirement is increased to between 3 to 6 months reserves depending on the overall qualifications of the borrower and co-borrower.

The mortgage industry is ever-evolving. Stay tuned for updates as they become available.


Foreign National ITIN Loan

Program Highlights:

Purchase, Rate & Term and Cash Out Refinance

620 minimum middle credit score

Full income documentation and 24 Month Bank Statement Options

Blended Income Allowed

First Time Homebuyers OK

Owner occupied & Non-Owner OK

Non Documented VISA or Residency Status OK

ITIN Number Must Show on 2 Years Tax Returns if Full Doc

Credit Must be Pulled with ITIN Number

Non Prime Lender Loan Highlights

We have many non prime lenders. Depending on the over-all credit profile of the borrower, we have options and from what our borrowers tell us, options are good. We agree. These highlights are from a non prime lender that requires a higher credit score, but have interest rates almost as low as our other “ability-to-repay” lenders.

Program Highlights:

  • Foreign Nationals allowed (2nd home and Investment)
  • Credit Scores as low as 680
  • Loan amounts up to $3 Million
  • Cash out allowed up to $1.5 Million
  • LTV up to 80% (85-90% with minimum FICO of 740) No MI
  • Multiple Options (5/1, 7/1, 10/1 ARM; 15 and 30 year fixed available)
  • Conforming or high balance loans for multiple financed properties
  • Bank Statement program – DTI up to 50%
  • 6 months rserves required for each property owned
  • US Citizens, Permanent Resident Aliens and Non-Permanent Resident Aliens allowed
  • Interest Only Available for all ARM’s
  • Minimum Loan Amount $100,00
  • Condominiums Allowed – FNMA Eligible (The FNMA investment property concentration limits – Non-owner to owner occupied do not apply )
  • 2nd home and Investment properties allowed

We’re currently working with a borrower out of Atlanta Georgia that has been with Suntrust for many years. he has over $700,000 in equity and they won’t give him a loan because they don’t like his 1040’s. He has very high credit score, lot’s of money in the bank (with Suntrust), has never missed a payment. He tells me that he’s frustrated, in large part because he has never missed a payment on anything even during the housing crisis. He said, “Gosh, do you realize I know people who have had their homes foreclosed on or sold short who are now able to qualify for new mortgages? The entire matter seems so insane to me.”

Super Jumbo Private Money Lender

May 30, 2016

Private Money Lender announced Wednesday that its private mortgage fund and its investors have provided a $4,700,000 First Trust Deed loan in San Diego, California. The loan was provided to a local real estate developer to acquire the property and complete entitlements for the construction of a 25 unit multi-family building. The property currently consists of a 17,000 square foot office building on two-thirds of an acre, on two corner lots, with spectacular bay views. The property is located in the Bankers Hill area of San Diego, just a few blocks from the entrance to Balboa Park. This is another strong portfolio loan program for our unconventional mortgage line and the underwriting process was smooth, quick and painless.

The property was appraised for $8,250,000, giving the borrower a total loan-to-value of approximately 57 percent on the transaction. Our developers have come to realize that in these types of entitlement and pre-construction scenarios, our private money fund is a much better option than an equity partner for two major reasons: the borrower maintains complete control of their project and the cost of capital is significantly less.

Mortgage Brokers have options and options are good.

Mortgage Pre Approval No Credit Check

Everybody has their own opinion as to how a credit inquiry will affect their credit score. Me too. Wouldn’t it be nice get a good idea as to what you qualify for before your broker pulls your credit?

We can pre approve applicants via this loan scenario criteria via this pre qualification form: Loan purpose; Loan amount; Amount of cash needed; Subject property market value; State of subject property; Subject property zip code; Property type; Occupancy type, Credit information such as: bankruptcy; foreclosure; short sale; loan modification; Credit scores; Employment type; Anticipated income documentation type; (yes, our borrowers almost always know this before they find us) Liquid assets.

For example:

We have a borrower in Virginia that has been self employed for less than 2 years and has almost no money going through his bank accounts. He needed cash out ASAP because he was putting all of his liquid reserves into his business. In an effort to stop the bleeding, he needed a cash out refinance but had no way to document his income or document 2 years employment history. However, he is rock solid in every other area.

We were able to pre approve him based on the following information he submitted via our pre qualification form, which by the way, does not require a social security number or a credit pull:

Loan purpose: cash out refinance; Loan Amount: $800,000; Amount of cash needed: $800,000; Subject property market value: $1,700,000; State of subject property: Virginia; Subject property zip code 22901; (good to have but not exactly necessary) Property type: single family residence; Occupancy type: owner occupied; Bankruptcy: no; Foreclosure: no; Short sale: no; Loan modification: no; Credit score: 800; Employment type: self employed; Anticipated income documentation type: no doc; Liquid assets: $2,100,000. There is also a comments field for any additional information the borrower feels we should know. Here are his:

Your Message: Subject home was purchased for cash of $1,500,000 in Dec 2014. Additional $700,000 in improvements recently completed. No outstanding loans. Looking for easy/no doc type loan as I have recently started a new business (in Europe) and am not yet taking income out of the business. Bottom line – Looking to use my excellent credit scores, unblemished credit history and low LTV on primary residence for an easy, no doc loan.

Here are the results we produced, 4 loan options, all asset based, three Asset Depletion loan programs and one asset based program, again, without checking his credit. These are the email notes from our wholesale representative:

Pricing with a 700 score:

1. Pricing on non prime asset depletion, 500K would be 5.125% on a 7 year fixed with no prepayment penalty. We would have to do the asset depletion calculation (take assets and divide by 84 and use for income). So, in your case:

50% of the IRA can be used (example if 1 million, use 500K)

100% of savings can be used, so 400K

Total assets for asset depletion is 900K divided by 84 = 10,714 you can use for income

2. On the prime asset depletion, the max debt ratio is 43% and you need 6 months reserves (cannot use the cash out as part of the income calculation).

3. Non Prime asset based = same as above but you can go to a 50% debt ratio and there are no reserves required. That pricing would be 5.875% on a 7 year fixed and no prepay.

4. Non Prime ATR (ability to repay) (Dodd-Frank rule) in full. We take the usable liquid assets and will lend to that amount!! So, in my previous example, we could lend up to 900K. The pricing on that would be (up to 50% LTV) 5.875 +.50 for the ATR in full pricing add on = 6.375%.

He chose option 4. No debt ratios, easy peezy, lemon squeezy.


Why is all of this important? Why is this good? Because we like it and far more importantly, our borrowers like it even more.

Alternative Lending

As every mortgage originator knows, regulatory compliance is a huge part of today’s mortgage industry and it is an ever changing landscape. As a result, many people continue to have questions regarding what we can and cannot do in today’s environment.

Mortgage industry professionals and mortgage applicants are talking about compliance and how it differs for Agency government programs versus Non Prime alternative lending programs. It must be made clear that all federally related mortgage loans, Agency and Non Prime must adhere to the same federal and state regulatory requirements. This includes fair lending laws, RESPA, TILA, the new TRID rules, etc. The difference between loans that meet agency guidelines versus non prime is the Qualified Mortgage or the QM tag versus NonQM. Currently, loans eligible for sale to the government agencies and GSE’s (Government-Sponsored Enterprise), this includes Fannie Mae, Freddie Mac, FHA, VA and USDA are considered to be Qualified Mortgage mortgages. This includes points and fees being a maximum of 3% and the Debt to Income ratio being a maximum of 43%. Non Prime loans on the other hand are underwritten to meet the “Ability to Repay” standards, but neither meet the standards of Qualified Mortgages, nor are they eligible for sale to the government agencies or GSE’s. These loans generally exceed the 3% points and fees threshold and the 43% debt ratio. Because these Non Prime loans are underwritten to meet the general ability to repay requirements, they are much safer than the old subprime model. Each loan is fully underwritten and evaluated to ensure the decision to lend is sound and based on sensible lending standards. This is a fast and dynamically growing unconventional loan world of non prime lenders specializing in providing options to good borrowers that may not have other mortgage lending options. These loans are manually underwritten to produce solid loans that have now historically performed to the extent that this non prime lending market continues to grow and thrive.

What is a Direct Lender?

If a Loan Officer tells you that he is a Direct Lender in an effort to imply that he has superior pricing, he either doesn’t know what he’s talking about or is being purposely deceptive. The only true Direct Lenders out there are what we call Private Money lenders, also known s Hard money lenders. These are either organizations representing large private pools of money from a group of private investors or a really really rich dude whom is trying to get richer. Either way, these sources charge hefty points and big interest rates, typically to residential or commercial investors that are buying, fixing and flipping properties or bailing someone out of a bad situation, often a homeowner seeking a way out of a bad housing situation on their primary home in order to pay their existing mortgage lender in effort to come current to avoid foreclosure.

Or if the same Loan Officer claims they have superior service because they have an “in-house” underwriter, this usually doesn’t mean better service, it often means limited service because that underwriter is bound by their in-house loan program guidelines and limited in-house staff; limited capacity.

If he believes he’s a direct lender because he’s selling the type of loans that are backed or insured by agencies such as Freddie Mac, Fannie Mae, Ginnie Mae or Aunt Sally, just kidding, my Aunt Sally doesn’t have that kind of money. He’s still wrong because none of those agencies provide loans direct to the consumer. So, Except for the really rich dude, we’re all brokers in a sense because it’s all third party origination, including portfolio and correspondent lending.If he believes he’s a direct lender because he’s selling the type of loans that are backed or insured by agencies such as Freddie Mac, Fannie Mae, Ginnie Mae or Aunt Sally, just kidding, my Aunt Sally doesn’t have that kind of money. He’s still wrong because none of those agencies provide loans direct to the consumer. So, Except for the really rich dude, we’re all brokers in a sense because it’s all third party origination, including portfolio and correspondent lending.

If a Loan Officer says, I’m a Banker so that means I’m a bank. No, it doesn’t. “Banker” doesn’t mean bank, Banker means advertising compliance. The reason for the “er” at the end of this job title doesn’t mean the Loan Officer represents an actual bank, it means he our she is complying with federal regulation as it pertains to advertising. Complying to federal regulation, yes. Better pricing and more control over the file, not so much. Trust doesn’t mean you’re a direct lender, t actual means you’re an indirect lende. If you fund off warehouse lines, you’re not a Bank or a Direct lender. A line of credit does not make you a bank. It is surprising regulators still allow the term “lender” in these examples. Most mortgage brokers are more agency “direct” with their investors than lender-employed originators, but they don’t use this title. Even if closing in portfolio-held by an originator’s employer, wholesale lenders offer the same programs in nearly every case (commonly with less overlays).

Because we’re all third-party originators, it is best to work with an actual Broker because a Broker can give you options specific to your credit profile; the best options that are available to you and your loan scenario.

A Mortgage Broker, you can go to any lender that you want that number one will provide the best pricing and number to the best service reason being is these lenders compete for a broker’s business which is good for the consumer which will often benefit the consumer.

The over-all cost of a mortgage loan is always very important and the quality of service is equally equally as valuable.

Because a broker has multiple resources and the freedom to pick and choose a wholesale lender that can can provide the best of both worlds, pricing and service.

The Power of Common Sense Mortgage Service

Motive lending brings the power of common sense back to the mortgage Industry. I have been In the mortgage industry since 1989 and have worked in practically every department including underwriting, processing, and funding.  My strength as Account Executive lies in understanding the borrower and their circumstances properly documenting their loan to be able to provide the best financing options available. Knowing the guidelines and working with a great team is key to your borrowers successful experience in mortgage lending.

We offer government loans with Ficos down to 580, Conventional Loans with Ficos down to 620, First Time Home Buyers with LTV up to 97%, High Balance, Jumbo and USDA loans. We also accept 1 year tax returns per LP for S/E borrowers, W2 verification Ok, 5-10 units financed properties, 6 month C/O seasoning new value, Conventional flips no overlays and much more.

Renzo Hechavarria
Account Executive
Motive Lending
(949) 656-8222

Help Us Welcome Wholesale Lender Account Executive Renzo Hechavarria of Motive Lending

We are very excited to welcome Mr. Renzo Hechavarria. He brings 26 years of mortgage experience. 1 professional, 26 years of real world mortgage lending service experience. We’ll take it! Professionals like Renzo make us better and our lives easier. This business can be a little stressful now and again, we can only be as good as those we choose to work with. Service in this industry is paramount. Anyone that has been in this business in any capacity knows this. Especially Renzo in that he’s worn many mortgage hats within the last 26 years. This is exceptional because every loan file will go through a number of different departments and he has personal experience in almost all of them. When you can see one file from many different perspectives, through the eyes of an Underwriter, Processor and Funding manager, he can identify any t’s that will need to be crossed, i’s to be dotted from front to back which means the loan will go through faster with far less issues that can typically slow or decline a file. He knows how to make a file solid before any other departments have to work on it. This makes everyone’s job easier. We appreciate it, the borrower appreciates it, the Realtor appreciates it and everyone in between. When we have questions, he has answers. We like that. Team.

New Portfolio “Loan-to-Purchase” Lender out of Los Angeles California

We have a new Portfolio Lender here in Southern California specializing in Bridge Loans. We have funded 3 loans with them so far and they have done it with the utmost reliability and integrity. Their lending philosophy is to provide make sense lending in a market of impractical and stringent guidelines.

We recently funded a 78% LTP, Loan-to-Purchase loan in Florida for a Single Family Residence Investment property on a home that sold for $589,000. A typical Bridge Loan lender would only offer 65% Loan-to-Value for a maximum loan amount of only $382,850. The problem was the buyer needed $465,000. This unconventional Bridge Loan lender offers a loan program that will go to 79% of the purchase price. Problem solved. The property was a 5200 square foot, 5 bedroom, 4 bath home on 2.3 acres. Lease was signed before the loan closed and is now occupied by a very happy renter. I know she’s happy because she called me numerous times throughout the 9 day escrow process asking status.

Working with a Portfolio Lender can sometimes be a little nerve racking, especially when our reputation is predicated on their performance. What we’ve learned is we now have a new Bridge Loan lender that we can feel good about as we maintain our network of reliable lenders and straightforward underwriters. Happy borrowers. Happy lenders. Happy renters. Happy me.

What is Private Money Lending?

Private money lending is mortgage money, an alternative to obtaining financing from a traditional bank or institutional lender. Our unconventional lending sources prefer investing their money into smart real estate investors that know how to properly buy and sell or buy and rent single family, multi unit, commercial and sometimes land opportunities.

There are many reasons for a real estate investor to utilize private money loans other than an inability to qualify for a conventional loan. There are a multitude of reasons as to why a good investor wouldn’t qualify for a conventional loan. It could be a credit issue. It could be an inability to produce income documentation or simply a borrower’s preference not to produce their income documentation. It could be an existing condition or characteristic of the subject property. There are many criteria and compensating factors considered by the private money investor source when making their decision when evaluating a private money application. Real estate investing can be very exciting and rewarding hard work. Private money is often an essential component of the real estate investment world of opportunity.

Real estate investment opportunities come and real estate investment opportunities go, so often the primary reason for a private money loan is a very simple: a very quick turn time from application to funding. Often an investor cares more about achieving their desired end result rather than the actual cost of the money. Opportunity, proper due diligence and simple math can equal a very nice payday for the investor.

New Salt Lake City Utah Lender

We are very excited to announce our newest member to our network of mortgage lending professionals from American Pacific Mortgage out of Salt Lake City Utah; Cindy Price brings the 2 necessary qualities to our network team; amazing loan product as well as exceptional service.

Cindy’s company is a full service Mortgage Lender. They have offer a full range of mortgage loan programs including some very unique FHA loan programs and some of the most aggressive Jumbo and Super Jumbo programs in the nation. Excellent credit gets you 90% Loan-To-Value Jumbo loan programs and Super Jumbo loan programs to 3 million. She also provides a niche service for all borrowers and Real Estate Agents.

Some of her Jumbo and Super Jumbo program highlights include:

Jumbo Loans:

90% Loan-To-Value financing to $850,000 with a 680 credit score and 9 months cash reserves.

89.90% Loan-To-Value financing to 1.5 million with a 740 credit score and 9 months cash reserves, 1 million, only 6 months cash reserves required.

Super Jumbo:

85% Loan-To-Value financing with loan amounts up to 2 million with a 760 credit score, 1.5 million with a 740 credit score and 3 million to 75% Loan-To-Value with a 760 credit score.

These niche jumbo loan programs are certainly some of the most exceptional unconventional loan programs you will see anywhere in the United States. Cindy is an expert in this area of residential lending.

Cindy also offers some very important FHA programs like the FHA Fresh Start program that helps borrower’s qualify for a new home loan in as little as one year after financial hardship.

Cindy also offers a very unique service that greatly benefits all of her clients, both her borrowers and real estate agents:

Cindy will get a full underwriter approval for her borrower up front, prior to going out and shopping for homes. Getting the full underwriter approval up front is nice because the underwriter has already underwritten just about all the loan documents. So once the buyer goes under contract, the loan will close quickly in that all there is left to do is underwrite the appraisal and title commitment. This kind of service can change the dynamic of the home shopping experience. For a buyer and buyer’s agent to go out and look at homes knowing that their loan is not just pre approved, but approved and 90% closed even before they make an offer puts them in a positive position because the seller always wants the most qualified buyer and often either needs or just would like to close as soon as possible for whatever reason. Service in king. Often a quick close is the #1 motivating factor for the seller. As a borrower, Cindy will make you look more attractive as a prospective buyer to the seller and if you’re a real estate agent, nothing more needs to be said about it because your job just became easier and more lucrative. If you’re not in the financial position to be a “cash buyer”, this is certainly the next best thing. Cindy has seen this scenario play out many times saving her borrower’s many thousands of dollars and making her real estate agents many thousands of dollars in commission. You look marvelous darling. Real Estate agents utilize this service to help cultivate productive business relationships with both their buyers and sellers. Leverage is also king.

This is certainly a special service that not many loan officers offer and we are super excited to bring this quality service and level of professionalism to be a part of our range of services.

Our network of mortgage and real estate professionals just got stronger in Salt Lake City. We are only as good as the people we choose to work with, we are certainly lucky to have Cindy with us.

If you’ve been recently declined and need a quick close or you just simply would like some additional loan options or just need some advice from a seasoned Loan Officer. Call Cindy, 801-803-4200 or visit Cindy’s broker profile page.

If you’re having a specific issue or some sort of challenge in securing the right approval for your situation, complete this pre qualification form, social security number not required, however, it will provide enough preliminary information to properly research your loan scenario before she pulls your credit or just give her a call on her mobile 801-803-4200.

I’m Better Than My Credit Score

Your credit score doesn’t dictate the kind of person you are. Your credit report doesn’t define your character, because of something someone else has reported on your credit report, erroneous or not. However, it will be an issue when you try to buy something; the home you want, the car you want, credit of any kind. Having control of your credit report makes this sort of thing as it should be, enjoyable, because you’re in control and able to bring these large purchases to fruition under the price and terms you want. If you try to purchase a home and you don’t know exactly what is on your credit report and your loan officer starts talking about accounts and numbers you don’t quite understand, it makes you feel vulnerable and unsure of what you’re in for and the level of service you will receive. Have you ever walked into a car dealership, they pull your credit and the salespersons demeanor changes and you feel like you’re about to be taken advantage of? Almost like they’re relieved to see you have issues on your credit report in that they now can tell you what you can and cannot buy? So you order your credit report to see what they’re talking about in order to gain clarity on exactly what is being reported.

If you have ever seen your credit report and have become confused, you’re certainly not alone. There are often names of creditors that you have never heard of. Trade lines you’ve never seen before. Some accounts have been bought and sold by others companies; debt collection companies and the like. It can be very complicated. We provide clarity as to what is going on with your credit report and can discuss with you what can be done and how long it will take so you can know exactly what to expect. We have tools in place that will illustrate what your options are and exactly what impact it will have on your credit score and give you the control that you should have going forward to buy a home or any sort of product or service or even a job.

We are not here to judge you. Fact of the matter, things happen in life that can result in negative trade line information. Events such as divorce, loss of a job, identity theft, illness, we understand these life events happen to the best of us which can affect your quality of life. If I you’re feeling hopeless about your credit situation, you should know what your options are. Most of the time, all you need is some regular maintenance and more times than not, is very affordable. Often this process can have a dramatic impact on your credit score as well as your over-all credit profile. We can even show you how to do it yourself.

Less Than 2 Years Employment History?

We offer both conventional and unconventional mortgage loan programs. Most lenders require 2 years employment. However, one of our niche programs requires only one year of employment for both self-employed and salary employees. We also have another that does require 2 years employment history. However, if within the last 2 years you were in college and your degree pertains to your current job, that time in college can qualify as part of the “2 year job history”. We are always researching new loan programs to share with you.