Posted at 12:46 PM in FHA Loans, Jumbo Mortgage Rates Report, La Jolla Real Estate , Mission Valley Condo Loans, Mortgage Financing, Mortgage Rates Report, Radio Mortgage, Real Estate, San Diego Condo Loans, Solana Beach Real Estate, VA IRRL Home Loan Refinance, Veterans Admin Home Loans | Permalink | Comments (0)
...and a worse time to be a San Diego buyers' agent.
San Diego is in a housing crisis and the simple explanation for it is that we have a tremendous backlog of new housing--the politicians aren't helping us either. NIMBY-ism, water restrictions, and traffic density are core issues which restrict housing and, while they are legitimate issues, the county has a 65,000 unit backlog of new housing.
Experts believe that San Diego County needs 170,000 housing units built from 2012-2025 to meet demand and population growth- some 15,000 housing units each year. Over the past five years, San Diego County has averaged 2000 new housing units.. We are already 65,000 units behind and, if we continue at this anemic pace, we will end up 120,000 housing units short in 8 years. That is pushing up prices of existing homes.
You might think that rising housing prices, and double digit rent increases, will halt population growth in the County. While it might, SANDAG believes the region will grow by another million people within 25 years. Increased demand for housing and restricted supply means one of two things to your clients: they have to move out of San Diego County or home ownership is now, more than ever, the only defense against this housing shortage. Your role, as a buyer's agent, is now more important than ever to your clients' futures.
We are here to help you--here are three ways we can do that.
1- TBD approvals: this isn't a pre-qualification, this isn't a pre-approval, this is a full underwriting approval for the buyers' credit and income. We take an application, gather up supporting documentation, submit the file to the underwriter, and have a clean approval within 5 business days. What this means is that we can close a transaction in 21 days, giving your buyers a competitive advantage when they make offers.
2- "Selling" the buyer to the listing agent: a lot of the buyer's agents we work with ask us to speak to the listing agent when they make the offer. We communicate to them that we have that underwriting approval and, more importantly, tell them exactly what that means. It means that the only issues for a full loan approval are property related: appraisal, homeowners insurance and title insurance. When we explain the process to the listing agent, and represent the strength of the buyer, more offers get accepted.
3- VA and FHA condo approvals. So many condominium buyers are shut out because the complex lacks an agency approval, The perception is that VA and FHA condominium complex approvals are burdensome and lengthy--nothing could be farther from the truth. Debra and I are experienced experts at VA condo approvals-- we have approved over 130 of them in the past 8 years and we get those purchase transactions closed in 45 days or less. FHA condo approvals are easier for us because we have a HUD-delegated underwriter who has the ability and discretion to approve the complex FHA-eligible
This is a great time to be a real estate agent in San Diego County, especially if you list a lot of properties. Representing buyers however, is difficult. We're here to make that job easier on you.
Posted at 09:26 AM in 92130Realtors.org, Blue Collar Beach Towns, Carmel Valley Realtors, FHA Loans, Jumbo Mortgage Capital, La Jolla Real Estate , Mission Valley Condo Loans, Mortgage Financing, Oceanside Townhouse For Sale, Real Estate, San Diego Condo Loans, Show me a Good Deal, Solana Beach Real Estate, Value Investing, Veterans Admin Home Loans | Permalink | Comments (0)
If you have an FHA loan in process this month. you were "given a gift" only to have it "taken away" nine days later. It was a political stunt by past HUD Chairman Julian Castro and it's a darned shame it happened to you. Let me break it down for you:
The FHA charges borrowers money to insure their loan against default. It adds 1.75% to your loan and charges a monthly mortgage insurance premium in addition to that added 1.75%. You can avoid this by having at least a 20% down payment and getting a conventional loan (although FHA rates are lower than conventional rates)
The FHA monthly mortgage insurance premium WAS based on an annual charge of .5% of the loan amount prior to the Obama Administration taking office. During the housing crash, the FHA insurance pool (the money collected from the premiums) was depleted because of all the foreclosures. The first term Obama HUD Secretary (Shaun Donovan ) started to increase the monthly mortgage insurance premium cost, from the annual charge of .5%, to an annual charge of 1.4%. This increased the monthly cost of a new $400,000 FHA loan from $166/month to $466/month.
This was a bummer for new FHA borrowers because they were essentially paying for the failures of the past borrowers. Still, if FHA was going to be sustainable, it had to do something so they opted this approach. It worked. The FHA insurance pool grew from being depleted to sustainable. As the size of the FHA reserve pool increased, the HUD Secretary during Obama's second term (Julian Castro) started reducing the monthly mortgage premium from an annual charge of 1.4% to its current annual charge of .8%. This reduced those monthly mortgage costs (on a $400,000 loan) from $466 to $266.
A few months ago, HUD Secretary Julian Castro floated another premium cut from its current .80% annual cost to .55% annual cost. This would reduce the monthly cost (on a $400,000 loan) from $266 to $183. This move was met with vocal opposition from career HUD bureaucrats and the Republicans in Congress. The prevailing thought was to leave the annual FHA mortgage premium be for now and let the reserve fund grow more.
HUD Secretary Castro ignored the advice of career HUD bureaucrats and issued the order to cut the FHA monthly mortgage cost anyway. He issued this order on January 11, 2017 to take effect for loans FUNDED after January 27, 2017. I thought this was suspicious when he issued it because all previous HUD orders were effective for loans STARTED after the effective date. This seemed "too good to be true".
If it looks too good to be true, it usually is untrue. HUD Secretary Castro's order, breaking with normal HUD policy on effective dates, was a legitimate HUD order anyway. We (like other lenders and REALTORS) delayed closings so that borrowers would benefit from the monthly cost reduction. Here's what you need to know:
Castro's FHA order to reduce costs was never gonna happen and Castro knew it when he issued it on January 11, 2017.
Castro was playing politics with borrowers' money. His intention was to put the new HUD Secretary (Dr. Ben Carson) and the new President into the tough spot of saying "Sorry. This was never a good idea". As such, Castro timed the repeal of the January 11, 2017 FHA order to come out just an hour before the new President was inaugurated. Castro was quick to release this repeal order to the media so that it could run with the story that "The New President RAISED FHA monthly mortgage costs".
Let me give you a simple analogy:
I am the principal of a school and you are taking my job next Friday. Last month. I asked all the teachers if we could cut the dismissal time from 3PM to 2PM, The teachers said "this is a bad idea" and you (the new principal) agreed with the teachers. Last week, I ignored the teachers advice and sent an email to all of the pupils saying that the new dismissal time would be 2PM, effective the Monday after you become the new principal. My last act as principal, before I hand you the keys to the school, will be to send an email to the pupils saying "Sorry, the new principal might be a meanie so I can't keep that 2PM promise to you". Guess who won't be popular with his new pupils next Monday? You.
It's political scheming and it's garbage. The Obama Administration took a parting shot at the incoming Trump Administration and, if you have an FHA loan in process, you are the loser in this political game. In my opinion, the incoming Administration should honor the reduction for 30 days and restore the (higher) premium for loans funded after February 28, 2017. They might not have time to do that and I don't make policy so, if you have an FHA loan in process, expect to pay the original (higher) amount.
Posted at 10:27 AM in Carmel Valley Realtors, Carmle Valley Realtors, FHA Loans, Jumbo Mortgage Capital, Jumbo Mortgage Rates Report, La Jolla Real Estate , Mission Valley Condo Loans, Mortgage Financing, Mortgage Rates Report, Real Estate, San Diego Condo Loans, Solana Beach Real Estate, Triple Crown Condos | Permalink | Comments (0)
WHERE ARE SAN DIEGO MORTGAGE RATES GOING?
Non-farm payrolls reported today at 156K vs. the expected 178K; the unemployment rate ticked up to 4.7%. The mortgage bond market is DOWN a quarter point. That doesn't compute.
Today's released data also signaled an uptick in wage growth. Uh oh, that means we are seeing inflation, right?
Not so fast. As Debra points out, a lot of minimum wage laws were passed; 19 states raised the minimum wage effective Jan 1. Businesses often meet those laws prior to the effective date to be in compliance.
The wage growth is probably just a reaction to legislation rather than organic growth. It's a "false positive".
I still think we see lower mortgage rates at the end of January and higher mortgage rates at the end of the summer. If you want to know how this would affect you, call me at 858-777-9751. A real conversation, with someone who has worked in capital markets for three decades, will give you greater insight
Posted at 09:10 AM in Carmle Valley Realtors, FHA Loans, Green Real Estate, Jumbo Mortgage Capital, Jumbo Mortgage Rates Report, La Jolla Real Estate , Mission Valley Condo Loans, Mortgage Financing, Mortgage Rates Report, Oceanside Townhouse For Sale, Radio Mortgage, Real Estate, San Diego Condo Loans | Permalink | Comments (0)
HR 3700 passed the House of Representatives (437-0) on Monday, February 2, 2016 and was referred to committee. Three key provisions of the bill are:
1- reduce the owner-occupancy requirement, for FHA-insured condominium approvals, to 35% (from the current 50%)
2- streamline the FHA approval process by expanding the number of lenders who can issue a DELRAP-approval
3- lengthen to approved time frame from the current 2 years (no definitive time)
It is our opinion that, because it was approved unanimously, it will get out of committee quickly and be sent to the Senate for a vote. The Senate is less "conservative" than the House so a super majority of votes to approve the bill is expected. President Obama has signaled that he will sign this into law. It is our opinion that this bill will become law as soon as April 1, 2016. This means that HUD could be approving condominium complexes, with less than 50% owner-occupancy, this Spring.
What does that mean to real estate professionals in San Diego?
It means that there will most likely be a flurry of FHA condominium submissions within two weeks of the bill becoming law. We think it is a good idea to start the FHA-approval process with us now. We can gather documents, prepare the package, and be ready to submit the day President Obama signs this into law, missing the expected onslaught of submissions.
Call me at 858-777-9751 with more questions.
Jill was a good client of mine. I funded an FHA loan for her when she bought her condo back in 2010. She was sitting on $100,000 in profit in just five years. Her original real estate agent left the business so she found an agent who advertised on Zillow (Jill is pretty tech savvy). She listed the property with this agent instead of calling me for advice. The condo didn't sell, Jill called me to ask why, and I had to tell her the truth:
"Your agent was the reason why your condo didn't sell, Jill"
I told Jill of the tale of two real estate agents: Barbara and Mike.
Mike listed lots of properties...LOTS of them. He was constantly on listing appointments, advertised those listings heavily online, and had things down to a "system". His signs were all over her heighborhood and each listing was prominently displayed on his website; he was a tech savvy property seller's dream agent...BUT...
Mike didn't know a darned thing about condos and condo loans. Thus, Mike was always presenting offers which Jill had to decline because Mike assumed that, because the condo didn't have an FHA or VA approval, only cash or conventional offers would be funded. Naturally, Jill was shown a lot of "low-ball, all cash" offers from investors and Mike told Jill "I guess the market has shifted". Jill's $100,000 profit looked more like $50,000 when Mike was finished presenting the offers. Naturally, Jill declined those offers and the listing eventually expired.
I had Jill speak with my friend Barbara, an agent who worked condo listings all over town. Barbara spent a good bit of time with me after I funded a loan for one of her VA buyers (way back in 2009). Since then, Barbara has done one thing...just one thing..which helped her take less listings but sell each and every condo listing she DID take, for full price.
Barbara insisted that the seller order the condo docs before it went into the MLS.
Barbara explained to her sellers that they would eventually have to order those condo docs when they were in escrow. Unlike Mike, who "shotgunned" his listings approach by saying "don't pay for them before you have a contract", Barbara explained that the couple of hundred bucks investment (in the condo docs), could add tens of thousands to the sales price, if the property qualified for FHA or VA financing. Barbara would order those docs immedialtely and send them over to me. I would take one look at them and say one of three things:
1- Barbara, I can get that complex both FHA and VA-approved
2- Barbara, I can get the complex VA-approved but you'll only be able to accept 20% down conventional, VA, or cash offers.
3- Barbara, that complex will only work for 20% down conventional loans and cash
Armed with that information, Barbara entered this into the marketing remarks on the MLS:
"Property may be eligible for VA or FHA financing. Approvals pending through World Wide Credit Corp. Call them at 858-777-9751 for cross approval"
Barbara explained to clients that that representation attracted twice as many buyers to her listings and justified charging a "premium" price--that meant more profit for her clients. You know how the story ends...
Jill listed with Barbara, we ordered those HOA docs, and Jill sold the property to an FHA buyer...for a price which was much closer to what she wanted than the offers she received when Mike had the property listed.
Wanna be like Barbara? Call me today at 858-777-9751. We'll grab a cup of coffee and I'll break it all down for you.
Posted at 11:11 AM in FHA Loans, Jumbo Mortgage Capital, Jumbo Mortgage Rates Report, La Jolla Real Estate , Mission Valley Condo Loans, Mortgage Financing, Real Estate, San Diego Condo Loans, Solana Beach Real Estate, Triple Crown Condos, VA IRRL Home Loan Refinance, Veterans Admin Home Loans | Permalink | Comments (0)
You just listed a new condominium and you're excited; you priced it right and you expect it to sell and close within 45 days. Financing is a big deal for most condo buyers; in San Diego, condos are often bought by first-time home buyers. You might be making these common mistakes which could cause the offers to come in much lower than you want, have deals fall out of escrow, or delay the closing.
1- Not checking to see which financing is available. See if the complex is approved for FHA financing and be careful to see when the expiration date of the approval is. Check to see if the complex is approved for VA financing. If you can't find the complex on these lists, call me at 858-777-9751.
2- Check with the HOA to determine the owner occupancy percentage. If the percentage of homeowners is under 50%, the buyers won't be able to use FHA financing or conventional mortgages with less than 20% down payment. If the percentage is below 50%, consider having us submit the HOA package to VA for a complex approval.
3- Not ordering the HOA documents immediately. Most agents tell owners to wait until you have an accepted offer,then ask the escrow company to order the documents. This is a huge mistake because it delays the process. It's a cost to your seller but the seller has to provide those docs to any buyer; they might has well get it out of the way. Committed sellers will do this up front. You can call me at 858-777-9751, to review those documents, so you are prepared for any offer.
Too often, agents make these mistakes and are chasing their tails in escrow. We can help you to stop chasing your tail, maximize the price your seller gets, and guarantee a quick and successful closing.
We just closed an FHA loan in a San Diego condominium complex which wasn't on the FHA approved list. Once upon a time, a real estate agent might call what we did a "spot approval". Spot approvals were where the underwriter looked at the legal and financial documents, of the home owners association, along with a questionnaire, and determined whether or not the complex was eligible for an FHA loan.
There are no such things as spot approvals anymore BUT... DELRAP approvals operate (practically) the same way as a spot approval does.
FHA-eligible condominium complexes are approved, for a two year period, one of two ways:
Our condo review department does this for us and we have access to a HUD-approved underwriter to make the DELRAP decision on the condominium complex. We process the loan just like any other loan but delay the appraisal until one week after we receive the HOA documents needed. If we get the documents within the first 2-3 days, after opening escrow, we have no problems meeting the appraisal contingency deadline.
Documents needed include:
If the complex WAS FHA-approved, but is now expired, we still have to submit as if it were a new submission. The two key issues which kill FHA complex approvals are:
Please call us if you have questions or need us to help your borrower get an FHA loan for an unapproved condominium. While this isn't a "spot approval", the process is similar enough to the old spot approvals that it feels like one. Our number is 858-777-9751.
Some mortgage lenders eschew condominium complexes which have a portion of the complex leased to commercial businesses. For example, in Pacific Beach (San Diego), there is a property with 8 units on top of a 2200 square foot, retail business. Why won't lenders make a loan there?
Both FHA & conventional financing permit a certain amount of the property, to lease commercial space. Fannie Mae allows for 20% of the property to be leased to commercial ventures as does Freddie Mac. FHA allows for up to 25% of the square footage to be leased commercially.
If the commercial space is more than the permitted percentage of the project, or it's being advertised as a condo-tel, or the public liability insurance doesn't cover the commercial spaces that are owned by the HOA, the loan can be funded.
In our Pacific Beach example, each of the eight units is approximately 975 square feet, for a total of 7800 square feet. The retail space is 2200 square feet. The commercial lease is 22% of the toal square footage of the complex. It is not eligibile for Fannie mae or Freddie Mac financing but is eligible for FHA financing.