DU or LP? How can one lender do something that another lender cannot…

How can one lender do something that another lender cannot these days……………….DU and LP.    What?  You have never heard of those acronyms or maybe you have but not 100% sure what that means to you?

I’ll let you know how this can help you close more transactions in a moment but first a little background.

Most Realtors have heard of these but may not know the “back-story”.  All loan originators know the power of these two initials. They stand for Desktop Underwriter (DU) and Loan Prospector (LP).  Over the course of the last 6 years since 2007, I bet 90% of all loans that have been underwritten and closed across the nation have been underwritten to these two government “agencies” better known as Fannie Mae and Freddie Mac (along with USDA and FHA).

These two “agencies” (as they are called in the biz) singlehandedly saved the housing market.  Without them to purchase the loans on the secondary market every lender from the biggest institutional bank to the smallest mom-and-pop lender would have closed their lending doors.  They alone established the new lending guidelines and qualification standards after the housing meltdown……………and for the most part still do.

OK, so here is how that can be a benefit to know this.  Each of the two agencies, while very similar in many ways, differ on a few “niche” areas.  Not all mortgage banks are seller/servicers like Blue Adobe Mortgage is to both of these AND allow our loan agents to choose (without any pricing difference) between the two when needed.

While Fannie Mae (DU) has always been the industry leader to underwrite loans (more than 60% of the closed loans flow through them) and most big box banks use a version of DU to underwrite their loans, Freddie Mac (LP) expands their guidelines to include a few niche things like:

The following scenarios are possible with Blue Adobe Mortgage in-house mortgage bank and would require us to ALWAYS use Loan Prospector (LP)/ Freddie Mac’s system……………..(ask your lender if they can do these in-house).

  • Conventional Loan with non‐occupant co‐borrowers used for qualification purposes. Otherwise known as “Blended Ratios”;
  • Conventional Owner Occupied loan with an LTV in excess of 80% on a Condominium project in order to achieve a “limited review” finding;
  • Conventional loan with a Self Employed borrower in order to achieve a 1 year Tax Return documentation requirement;
  • Conventional loan with a DTI in excess of 45% at this time LP tends to be more forgiving on higher DTI ratios;
  • Freddie Mac Open Access loan program.

Have a great week!!

Bad Credit Waiting Periods

Every week I am asked multiple times about how long a buyer needs to wait after a serious credit issue before they can purchase again.  Fannie Mae, Freddie Mac, FHA, USDA and VA have fairly clear guidelines around these timeframes.  I have  below is a great “go-to” flyer for the typical required waiting periods after a serious derogatory credit event. As always, best is to have them call me so we can determine exactly where they fall in the guidelines and work with them to be ready to purchase in the future.

Have a great weekend!!!New Credit Seasoning Time Frames_Come Back Buyer OSI 081814

‘Boomerang Buyers’ Are Staging a Comeback

Daily Real Estate News | Monday, July 15, 2013

“Boomerang buyers”—former home owners who have gone through a short sale, foreclosure, or bankruptcy in the past few years and are saving up for a down payment to purchase a home again—are coming back. They’re expected to flood markets in some of the hardest hit areas for short sales and foreclosures in the coming years. For example, boomerang buyers are predicted to account for nearly one in every five home sales in the metro Phoenix area this year—double the projected U.S. rate.

Rising rents and the desire to own again now that the economy is more stable are driving many boomerang buyers to re-enter the market. They also want to jump in before interest rates and home prices climb too much higher.

But how soon they can jump back in will depend on the type of loan they had as a previous home owner. For example, boomerang buyers who had FHA loans may need to wait only three years if they can prove that a hardship, such as job loss or death of a wage earner, led to their foreclosure or short sale.

Borrowers have typically been required to wait five to seven years to qualify for another loan, but mortgage giants have begun to change their rules to allow home owners who underwent a foreclosure or short sale to qualify sooner. Those who underwent a short sale will likely qualify the soonest. However, not all lenders are participating, …………………………………..

FHA – Change to the Flip Rule

A quick heads up regarding a change with all FHA loans effective January 1, 2015………(don’t shoot the messenger).

  • Anyone working with a seller that acquired a property less than 90 days ago and is “flipping” it to a new buyer using an FHA loan
  • or any buyer negotiating a purchase of a home from a seller who acquired the property less than 90 days ago and wants to use their FHA loan to buy

We don’t see this come up much anymore, but it does still happen from time to time…………

FHA FLIPS – PROPERTIES BEING RESOLD WITHIN 90 DAYS OF PREVIOUS ACQUISITION.

Expiration of the Federal Housing Administration’s Property Flipping

Temporary Waiver: FHA’s guidelines state properties resold within 90 days of the prior sale date are not eligible for FHA financing. FHA issued a “temporary waiver” to this ruling in February of 2010. FHA announced that the temporary waiver of FHA’s regulation that prohibits the use of FHA financing to purchase single family properties that are being resold within 90 days of the previous acquisition expires on December 31, 2014 and will not be extended.

What does this mean to you and your clients? Any FHA Purchase contract fully executed after 11:59 p.m. December 31, 2014 will require that at least 90 calendar days has passed since the last recorded sale of the subject property in order to be eligible for FHA financing.

What does “Fully Executed” mean? FHA deems a sales contract to be fully executed when all parties to the contract have signed the contract and the contract is enforceable under the law of the state the property is located in.

What to look for? When you receive an FHA transaction you will want to review the chain of title on your title report and look for the prior transactions. Look to see when the current seller acquired the property and do the math! Example:  Seller acquired the subject property on October 14th, 2014. If your new purchase contract is fully executed on or prior to January 12, 2015 your transaction would not be eligible for FHA financing. If your purchase contract was fully executed on or after January 13, 2014 your transaction would be eligible for FHA financing.

Please be mindful, once a contract is fully executed there is “no going back”.

Niche Stuff

Updated on NEW Jumbo products we recently rolled out –

90% Jumbo – No MI – 5/1 Arm up to $1.5 million

70% Non-owner Jumbo – Interest Only

80% 2nd Home – Interest Only

Or

Our Asset Depletion Program could be the perfect solution!

  • Retired and non-retired borrowers are eligible
  • No add-ons to your rate for using asset depletion income
  • Asset Depletion income can be coupled with other forms of income (pension, social security, w2 wages, self-employed income, etc.)
  • 75% max LTV (subject to occupancy type)
  • All occupancy types allowed
  • All collateral types allowed

And lastly a Bank Statement Loan for self-employed and over 10 financed properties loan……………….

And they say Christmas only comes once a year…. Great New Product(s)

Blue Adobe Mortgage is excited to announce three new Alt QM programs!

Maybe your buyer just needed that little extra stretch to get them into a new home in 2015!

Alt Income
o Income calculation  based on bank statements for self-employed borrowers
o Self-employed borrower is required, tax returns NOT allowed
o Additional spouse W-2 income or other non-self-employed income can be used for qualification
 Standard income documentation is required
o 5/1, 7/1 and 10/1 ARM, interest only option available

Alt Investor
o Program designed for experienced real estate investors
o Qualification based on cash-flow solely from the subject property
o Borrowers must have 3 years history owning, retaining and managing residential real estate
o 5/1 ARM, interest only option available

Alt Jumbo
o Jumbo and non-conforming loans that fall just outside the parameters of Qualified Mortgage requirements
o Loans must reflect one or more of the following characteristics:
 Interest Only
 DTI exceeds 43%
 Loan amount exceeds conforming or high balance loan limits
o 5/1, 7/1 and 10/1 ARM, interest only option available

BLOG QM

 

What a month! What a year!!

Thank you to our friends and advocates who have helped make Blue Adobe Mortgage the 4th largest lender by “purchase loans” on the Monterey Peninsula so far this year!!!   I continue to be amazed and humbled by the professionals that I am fortunate enough to work with everyday here at Blue Adobe Mortgage.

Our Licensed Loan Originators take a very solution oriented approach to our buyer’s individual needs at Blue Adobe Mortgage.

……and it’s not just our loan officers here that are “solution oriented”.

We have a dedicated team of individuals that help make the process as smooth as possible for buyers.  In what can sometimes seem like a complex process our processors, underwriters, document drawers and funders all work together to give the buyer an excellent experience.

Solutions? You want solutions……, I’ll give you solutions……

• Underwrite on 1 year tax returns for self employed buyers (case by case)
• Fresh Start Program that allows no waiting period for Short Sales and Foreclosures
• Blended ratios on non-FHA loans
• No MI on jumbo loans with less than 20% down up to $850k

Have a great 4th Quarter!!!

Success Stories - Quarter 3 2014

Team Work Works

Hi and Happy Tuesday!

I think you might like this.  The below is from a guy I identify with quite a bit.  His name is Pascal Finette.  He talks below about how a great team needs to work together in order to be GREAT.  In order to truly be exceptional on a large scale you must trust your team members and they must be held accountable………simple as that.  In the real estate business our teams not only consists of our internal team members like my team of Chris Harris (my assistant), Heather Phillips (my operations manager), Jim Challis (my sales manager) and the rest of our staff, but also the Realtors we work with, the escrow officers, the appraisers, the mortgage banks, the termite companies and others who we rely on everyday to do their part of the transaction and do it beautifully

My personal experience of “empowering your team members” came when I was 20 years old working for my mentor and friend Joe Solis from Monte Vista Market.  Joe did not micro manage the store but yet empowered his team (the produce manager, the head butcher, the dry-goods person) to each manage their part of the shoppers experience.  Each person on the team took great pride in doing what they did best and as such the store took on an almost iconic standing during that era and the shoppers received over the top personal attention during each department they walked through.  It was truly something to see.

Here is how Pascal puts it……………………..enjoy
The Micro-Managing Antidote
Recently I spoke with a young founder – he observed a tendency in himself to micro-manage his team. When talking about it, it became clear that this tendency mostly came from his anxiety to make sure stuff gets done. He felt that he needed to stay on top of things all the time – and that let him to be more involved that he should and wanted to be.
Our discussion made me think of Gordon Ramsay’s TV show Hell’s Kitchen: Beside the entertainment value of having Gordon regularly loose his marbles, it offers a fascinating insight into the stressful environment of a professional kitchen. The thing which always stands out to me is the way the different stations work together: An order comes in, is dissected into the different parts (meat, veggies, garnish), the respective stations are informed and they shout back that they a) received the order (acknowledgement) and b) when it will be ready (information). When this is done in a fluid movement the kitchen runs like clockwork. When this line of communication breaks down, it’s time for Gordon to get a nervous breakdown.
“Teams: Acknowledge receiving a task, indicate when it’s done and how others will know it’s done.”
There is some deeper insight into this: Teams should work like the kitchen staff – when you receive a task, acknowledge it, tell the others when it will be done and how they will know it’s done. Establishing this simple routine in a team will immediately lift you out of micro-manage mode (at least for the reasons which made the young founder a micromanager).
Always Run. Never Walk.
Pascal

VA Loans for Jumbo buyers?

Happy Hump Day –

Did you know that VA will allow the Veteran Buyer to pay for termite work required to obtain a clear termite report?  It’s true! The purchase contract must clearly state what work will be paid for by the Veteran/Buyer and at what cost.

As long as the details are clearly spelled out on the purchase contract, the amounts are listed on the HUD and the borrower has sufficient acceptable assets to do so, the Vet can pay for termite work. Keep in mind the Veteran Buyer can never be charged for the Termite/Pest inspection fee.

Don’t overlook the benefit of this great loan product.

•Zero down payment up to $500k purchase price in Monterey County
•No Mortgage Insurance
•$700k purchase price with approximately 7.5% down payment…. only $50k down
•Today’s (4/23/14) interests rates for these loans are:
            -Under $417k loan amount = “aprox.” 4.125% with no points (with about $1K credit back to the VET)
            -Up to $650k loan amount = “aprox.” 4.25% with no points (with over $1k credit back to the VET)

With Jumbo loans in Monterey County being anything over $484k, these VA loans can be a fantastic alternative to a jumbo loans for a VET.  Attached above is a user friendly buyer flyer.

Call or email if you have any questions or would like to know more about a VA loan.

 

VA Loans

Jumbo Buyer Loan Product / Asset Depletion Loan

“Every Loan is like a Snowflake”

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This is one of my favorite sayings at Blue Adobe Mortgage. You know that the people that live on the Central Coast are as unique as their homes. Unique situations call for flexible solutions.

 

Let our “Asset Depletion” loan help your high net-worth buyers

Example of Asset Depletion

-$2.5M in the bank
-$500k being used as reserves
-Remaining $2M being used as income via asset depletion (separation of money from actual accounts NOT required).
-Asset Depletion Calculation: $2,000,000 / 120 months = $16,666 monthly income.
-Depleting term of assets 10 years (although an Underwriter reserves the right to increase the term of depletion if necessary to offset other risk factors).
-Assets used for Income can NOT also be used for reserve requirements LTV will be limited to 75%.
-No other product exceptions will be considered when using asset depletion for income.

I am happy to discuss the program with any of your buyers who may fit this profile.  Have a great weekend!

Earning your business one buyer at a time……

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