Custom Solutions

Sometimes, obtaining a purchase loan is not as simple as it should be.  The entire real estate industry is facing challenges of contraction, shifting guidelines, and overwhelmed lenders.  Direct lenders are locked into their own guidelines and focus on the easiest transactions.  Mortgage brokers are finding it hard to survive, and much expertise has left the business.  Many qualified buyers are getting pushed aside and trampled leaving them with no option to homeownership.  Realtors are finding the market impossibly frustrating as they see their transactions fall apart for little to no reason. 

I believe that the right expertise can turn a mortgage crisis into a mortgage opportunity.

Each borrower has a unique situation, and there is no one strategy that makes the difference.  In most cases I must combine 3-5 of these strategies to create solutions to one borrower's needs.  I present some of these strategies in hopes that you will begin to understand that there is always a solution to a borrowing situation.  Use my expertise to help create solutions and options for your borrowing needs. 

Here are some examples of industry issues where the right strategy and experience can create transactions.

Sellers are becoming picky--

High fallout has forced sellers to demand LENDER approval letters before they will accept (sometimes even consider) offers from a prospective buyer.  On the other side of the issue--lenders want a complete package, sometimes even including appraisal, before they will underwrite a loan.  Neither sellers nor lenders want to budge--leaving buyers stranded...

I can help to get a lender approval BEFORE you go shopping for a home.  Because of my large volume and lender relationships I have negotiated for lenders to accept loans, from me only, with the property yet to be determined.  For conventional loans, it takes about 2 days from receiving a complete package to obtain an approval.  For FHA loans, it will take about 5 days. 

If I get you an approval from a lender ahead of time it will--

• Give you/your buyer piece of mind that we will have a smooth transaction.
• Put us in the position to close in 2 weeks.
• Put you/your buyer in the strongest negotiating place, next to all cash.
• Demonstrate to sellers that you are serious and prepared to close.
• Free the Realtor to focus on representing their buyer instead of managing a lender.

Take the stress out of the transaction.  Help me to get you a lender approval ahead of time.

Stated Alternatives--

Many clients get in touch with me believing that they need to get a loan using "stated income" qualifying.  It is easier to qualify in this "full doc environment" then ever before.  The reality is that many people actually qualify using their reported income.  If they don't there is always an option or solution that may be available.  I specialize in helping borrowers obtain conventional loans at conventional loan rates when they believe they need "stated" or when they have been turned down elsewhere.

By understanding exactly what the lender requires, we can create solutions to any income documenation quandry. 

I spend much of my time educating callers as to how I can fit them into a conventional/FHA loan, instead of doing a stated loan (even if one were available)--

1. I intimately understand the Fannie Mae Desktop Underwriter platform and the guidelines it attaches to.  Also, I work with lenders who follow the "rules" to the letter.  Desktop Underwriter is an underwriting software designed to help underwriters know how to make determinations on loans.  It has many moving parts, but is manipulated easily once you understand the thresholds.  DU is the center piece of the underwriting world right now.  All conventional lenders and even FHA use the DU platform to help underwrite loans.
2. If a borrower is Self Employed it does not automatically mean that they need to do "stated" income.  I cater about 75% of my business to borrowers who are self employed.  This has earned me a specialized expertise and allowed me to create lender and underwriter relationships that have a parallel expertise to mine. I have multiple strategies to help self employed borrowers obtain financing.
3. I am an expert at understanding tax returns and how a lender will evaluate them.  There are many write offs buried in taxes that can be added back in to improve qualifying income.  I do many loans for people reporting little net income only to find large home office deductions, depreciation, C corps, etc--all that I can pull income from.

Stated income is a thing of the past.  That does not have to mean qualified borrowers cannot buy.

Income review and structure--

Underwriters have a very black and white set of lenses that they use when analyzing a borrower's loan file.  They ALWAYS appreciate it when you give them just the right combination of explanation,  documentation, and income structure to approve the loan.  Too often I pick up the pieces on easy (what I consider to be easy) loans because they have too much information--i.e. two years taxes when only one is required.  Sometimes, lenders can ask for documentation that goes above and beyond the minimum requirements.  Knowing which lenders to use makes a tremendous difference. 

In my mind, putting a loan application together properly is the most basic of loan originator skills.  However, if you don't know the guidelines behind the application it is like driving a car from the passenger seat.

Here's why I say that now is the easiest it has ever been to qualify borrowers in a "Full Doc" environment:

• I can get loans approved up to a 65% expense ratio.  Many direct lenders, like Wells Fargo, limit this to 50%.  It takes surprisingly little income to qualify with this ratio.  $3000 p/mo buys you a $300,000 property with 20% down.
• 1 day on the job--I have a lender who will approve a conventional loan if our borrower has only one salary paystub or 6 months Self Employment earnings showing on last years taxes.
• In most cases for conventional loans, only 1 years taxes are required.  This sometimes allows us to choose what makes the most sense--using 07 can be better then filing 08.  Or, if you know you are buying in 09, claiming less deductions on 08 taxes can go a long way towards accomplishing your bigger picture goals.
• Property owners--Most other originators aren't aware how to use rental income at 100% occupancy as shown on the taxes.  We are allowed to use 100% occupancy. 
• One time losses/expenses can be overlooked and ignored.
• If our new property is an investment property, I can use rental income on new property to help qualify.  If the property cash flows well enough it can be a bonus to the bottom line instead of a detraction.
• Lenders will ignore expenses paid by other parties or a business.  This is an important lesson for self employed borrowers and cosigners.  Always keep cancelled checks documenting that the payments are not made from your personal or joint accounts.

 Don't have 30% equity, but want to buy?

This one keeps me pretty busy right now.  Agencies and FHA have introduced a guideline in August of 2008 that require special parameters for buyers of primary residences whose existing primary residence does not have a 30% or 25% equity pad.  FHA says that you must have 25% equity in the old home in order to qualify using rental income.  Conventional loans requires you to have 30% equity.  If not, you may not use the rental income AND you have to have reserves to cover payments for both properties for 6 months!

Understand this clearly--you CAN buy a home if you don't have the required equity.  We would have to qualify you with both house payments and possibly have extra reserves.  If we can meet the tigher requirements, then we can do a loan with standard down payments (3.5%, 10% 20%. etc).  If not, we need to create other options.  Depending on how much is available to put down, there are a couple of solutions to this problem.

3.5% down-- With only a minimum down payment available we are limited to doing an FHA loan.  This eliminates the requirement for added reserves.  In most cases none are required. 

If a borrower's income cannot support both housing payments without the benefit of rental income then we will need to add a coborrower.  We can add the income and expenses of the other family member to help offset the added burden.  Once we structure it right, it becomes quite a simple loan.

20-25% down-- If we have this much to put down we can create some more good options.

First, the expense ratio requirements open up much more to 65%.  There is a lot that I can fit in with this expense ratio.

Still, if a borrower cannot support both obligations on their own income I ask them to consider buying a new investment property.  This provides two big advantages: 1. I usually only need 2 months reserves for the subject property 2. I can qualify using proposed rental income (as documented by lease agreement and appraiser) to help offset the new obligation.