SAN DIEGO MORTGAGE AND REAL ESTATE

VA Approved Condos in La Jolla, CA

There are twelve condominium projects, approved for VA financing in La Jolla , CA as of September 28, 2012.  They are:

• Boardwalk of La Jolla
• Broadmoor Condominiums/ La Jolla Village
• Cape La Jolla Gardens
• La Jolla Place
• Windemere
• Clinton Manor
• La Jolla Hideaway
• Mount La Jolla
• Playa Blanca
• La Jolla Racquet Club
• Torrey Pines Arroya
• Villa La Jolla

12Mortgage.Com makes VA loans up to $1,000,000.  The 2012, zero-down VA loan limit in San Diego County is $477,000.  Loans higher than $477,000 and less than $1,000,000 may require a downpayment but do not have a monthly mortgage insurance requirement.

If you do not see your complex on this list, it may require a review from the Veterans Administration before a loan can be funded there.  Please read about how we are able to help veterans by expediting that review process or call Brian Brady at 858-777-9751

 

Foreign National Mortgage Financing for California Properties

I am continually asked about foreign national mortgage financing, mostly from Canadian investors looking for a vacation home or rental.  Most of that mortgage capital has dried up but there are two lenders, who will make these loans, at good interest rates, to resident aliens, working and living in the United States. 

The two major conditons are:

1- An I-94 form with an expiration date that is more than two years from the date of property closing or an I-94 form with a "duration of status" (D/S) for expiration.

2- Employment by an American company, with at least one year's history OR, six months history and an employment contract, with at least two years remaining on the contract

Furthermore, the lenders want to see an established banking relationship, in the United States, for at least three months.  Like all other conventional mortgages, the down payment (at least 25%)  and closing costs funds must be verified as seasoned for at least 60 days.  Any large deposits to that account will be required ot be explained and documented.

Generally speaking, a loan will be made for up to 75% of the purchase price and 30-year fixed-rate loans are available.  rates are typically about .125% to .375% higher than a traditional mortgage, made to Americans.

Jumbo Mortgage Rates Report--July 21, 2011- MARKET ALERT

LA JOLLA, CA--Jumbo mortgage rates are essentially unchanged since my last report (rate indications offered below) and that worries me.  Wall Street may be overconfident of a debt-ceiling hike deal and that overconfidence is priced into the market. 

In Washington, it can be tough to understand why New York is so sure of itself. While Wall Street is brimming with confidence that a deal will be struck, many Washington officials say the dynamics of this stalemate are different from any other they have encountered. And that means New York traders could be in for a big surprise in early August.

With less than two weeks to go before the Aug. 2 deadline, no deficit-reduction plan offered by the Senate or House has gained a significant amount of momentum. The House GOP’s “cut, cap and balance” proposal is dead on arrival in the Senate, which has yet to move its own budget. 

This means that a failure to extend the federal borrowing limit will catch markets by surprise; we could conceivably see jumbo mortgage rates rise 1-1.5% overnight, in early August.I've worked with mortgage-backed securities traders and I'm amazed at the huge gamble they're taking.  The culture of government bailouts is so pervasive in the financial community that the very flinty-eyed bankers are willing to ignore this risk.

Could jumbo mortgage rates go lower?   I suppose they could but not much.  There is clear and present risk right now.  If you CAN, lock your mortgage rate to avoid this risk.  

Jumbo Mortgage Rate Indications, as of July 11,, 2011:

• 5/1 ARM----------3.875%/4.110% APR
• 7/1 ARM----------4.375%/4.571%APR
• 10/1 ARM---------4.750%/4.917%APR
• 30 Yr Fix----------5.125%?5.557%APR
• 30 Y FNMJmbo-4.500%/4.724%APR
• 30 Y FNMA-- ----4.375%/4.615%APR

Jumbo mortgage rates quoted are for loan amounts from $700,000 to $2,000,000.  Credit, down payment, and income restrictions apply.  Not all will qualify.  Equal Opportunity Lender.  NMLS ID 339261

Jumbo Mortgage Rates Report--July 11, 2011

Jumbo mortgage rates gave returned to the end of June levels as the mortgage bond market reacted to a weak employment report and more fear about bloated PIIGS (European government default risk).  I talked about this in my Jumbo Mortgage Rates report for July 5, 2011.  

I digress but I'd be remiss if I didn't tell you that today is Free Slurpee Day.  Slurpees can cause Brain-Freeze.   I would love to freeze today's mortgage rates for a week or so but I'm not so sure the markets will accomodate.  Last week, I suggested you could hold out for lower rates; that happened.  Today, I think it makes complete sense to lock-in your mortgage rate at application.  While rates could trend lower, the risk of them rising another .25%...quickly, far outweighs the reward of them improving by .125%.  As always, my advice may not be perfect for you so it's best to speak with your loan originator.

Jumbo Mortgage Rate Indications, as of July 11,, 2011:

• 5/1 ARM----------4.000%/4.210% APR
• 7/1 ARM----------4.375%/4.571%APR
• 10/1 ARM---------4.625%/4.807%APR
• 30 Yr Fix----------5.125%?5.557%APR
• 30 Y FNMJmbo-4.500%/4.724%APR
• 30 Y FNMA-- ----4.375%/4.615%APR

Jumbo mortgage rates quoted are for loan amounts from $700,000 to $2,000,000.  Credit, down payment, and income restrictions apply.  Not all will qualify.  Equal Opportunity Lender.  NMLS ID 339261

Jumbo Mortgage Rates Report- July 5, 2011

Why do La Jolla, CA home buyers keep watching the riots in Greece?

Once again Greece threatened default on its soveriegn deb.  This sent shockwaves through the world financial markets.  This time around, the European Union was offering less solidarity and more austerity to its little peninsular cousin.  Capital fled European markets and into American treasury bonds during the middle of June.  This drove bond yields down which caused jumbo mortgage rates to decline to their lowest levels since 2004.

Last Monday, we locked a $500,000 loan, at 4.75% (30 year fixed), with no fees or discount points.  We locked a $1.1 million loan at 5.125% (30 year fixed), with no fees or discount points.  Today, those same loans would be more expensive by a discount point (1% of the loan amount).  This means that the first buyer would have to bring an extra $5,000 to closing today, and the second buyer would have to bring $11,000 to closing today , just to get the same rates.

Why are jumbo mortgage loans so much more expensive today than they were last Monday?  Greece struck a deal with the European Union to get emergency loans.  That action reassured golbal financial markets that a Greece default would be stayed.  Money flowed into equities and out of the safe haven of US Government securities.  Mortgage bond investors demanded higher yields from mortgage originators which was passed onto the retial borrower.

In which direction will jumbo mortgage rates head this summer?  I believe rates will be stable through Labor Day with some erratic movements upwards.  The federal Reserve bank has halted its quantitative easing plan.  While this should pressure jumbo mortgage rates higher, Greece is but the first of many sovereign default crises bubbling beneath the surface of a calm Mediterranean Sea.  I expect those threats of crises will hold the upwards pressure in check. 

If you can, lock a jumbo mortgage rate under 5%.  If higher than 5% is offered, you might pause to read what's happening in Europe.  Anothe ron of these crises could afford you that rate under 5%.

Jumbo Mortgage Market Attracting Proven Key Players

My post about the return of jumbo mortgage capital was noticed by some newspaper columnists and I spent a bunch of time on the telephone with them last week.  Each and every columnist, from the local paper to THE national business daily wanted to know what would happen if the government unwound its involvement in mortgage lending.

My response?  Lenders lend.  That's how we make money.

Well,  that's how lenders USED to make money.  These past few years, lenders have been engaged in arbitrage rather than lending.  I wrote about how government was crowding out private enterprise and it would prolong the housing finance depression rather than cushion the blow.  Thankfully, agency loan guarantees will be lowered this fall and the opportunities are attracting majoy key players.

Is it any surprise that the Wall Street Journal reports that  Lew Ranieri is ready to jump on this opportunity?

Yet Mr. Ranieri believes now is the time for nontraditional lenders to enter the market. While the bank-lending standards that created the mortgage crisis were too loose during the housing boom, they are now too tight, Mr. Ranieri says, reducing the supply of mortgages to average borrowers and opening a door for lenders like Shellpoint Partners LLC, a mortgage-finance company he recently founded with two partners.

This doesn't surprise me.  I mentioned that I was speaking with hedge funds and investment managers, earlier this year, to measure their willingness to enter the non-agency lending market and the responses were the same; they all want to make these loans but the government arbitrage scheme makes it too profitable to do anything else.  I posited that lenders, outside of the new GSE's (Citibank, Chase, BofA, & Wells Fargo) would look to serve those markets soon enough.

Mr. Ranieri sees an opportunity in the alternative-income documentation niche, most notably the self-employed borrower:

The aim is to target borrowers whose credit profiles prevent them from obtaining conventional mortgages in the tight market but who are nevertheless good credit risks and can make a down payment of at least a 15%. The company said a typical borrower could include self-employed contractors and other professionals who have assets and a steady income stream. The self-employed have been the hardest-hit by bank credit-tightening trends.

Returns could be staggering.  While most agency loans charge 4.5-5.0% in interest, non-prime loans can charge as much as 9% in interest.  Certainly, that kind of margin will attract capital and the spread will narrow in the future but the early providers can expect to reap rewards for their prescience. 

We saw this in jumbo lending.  Last year, jumbo home loans were as much as 1.5%-2.0% higher than agency loans.  Two government-supported banks offered non-government loans and bigger players started stepping in.  Today, the margin between agency loans and jumbo loans is but .375%.  Jumbo mortgage rates today average just 5.0%.

Lew Ranieri isn't the be all and end all of mortgage lending but he is an accomplished player in this market.  With over 40 years in mortgage securitizations, his actions should be a leading indicator of where lending is headed.  His most recent activity is a positive sign.

 

 

 

Proposed Good Faith Estimate Should Be More Consumer Friendly

The Consumer Financial Protection Agency just released its proposed Good Faith Estimate (GFE) disclosure form.  The form will combine the best parts of the original GFE (which we still issue) along with the "new" GFE (which is confusing and we issue, per disclosure regulations).

This six-minute video will walk you through it:

Jumbo Mortgage Products Accelerating to Meet Demand

I'm often called a "radical capitalist" because I have a belief in free markets.  No, I'm not talking about the faux mortgage "market", where banks make loans, package them up to get government-agency guarantees, and sell them to Wall Street, who will come begging for bailouts when they lose money.  I'm talking about unencumbered markets.

Time Magazine explores what life will be like after Fannie and Freddie are buried (they're already dead).  As usual, it appraises the situation mostly wrong, repeating the oft-beleived mantra that housing is too important to leave to the private sector.  What I found, when I started my search for private-money mortgage capital, contradicts the Time articles' prognostications:

Fiction: Everyone will have to put 20 percent down.
Fact: Lower down payment options will always exist.

Time Magazine got this one right.  Private mortgage insurance companies are already rolling out products which insure loans down to 5% down payment options, here in California.  We've come a long way since 2009.  Jumbo mortgages are available with as little as 10% down, up to $1,000,000.  This was all private market solutions.

Fiction: The homeownership rate will plummet.
Fact: The government will probably not be getting out of the mortgage business, so any declines in homeownership will be due to changes in consumer sentiment, not access to loans.

Time got this one 100% wrong.  The Dodd-Frank financial overhaul bill is abysmal.  The newly created Consumer Financial Protection Agency is leaderless, other newly created agencies have no sense of direction, and the Federal Reserve compensation restrictions have every bank complaince officer scratching his head to understand how to best implement them. 

Until those regulations get repealed, and political sentiment says they will be repealed , home ownership rates will continue to plummet.  When government gets out of the way, and stops insuring the bad lending decisions which poorly run banks make, the healthy banks, credit unions, and hedge funds will meet consumer demand, and offer profitable products.  Lenders lend; that's how they make money.

Fiction: High-end homes will become harder to buy.
Fact: Conforming loan limit changes will affect a small sliver of the market, a sector of housing consumers who can afford to get jumbo loans on the private market.

Time Magazine got this partly correct.  As conforming loan limits revert to $417,000, this October, even more private lenders will step up to meet the demand of the Southern California market.  As stated earlier, we already have a 10% down payment option for home purchase up to $1,000,000.  When banks see there is demand in that $1,000,000 to $2,000,000 price range, they will make loans.

The frozen jumbo mortgage market is thawing.  It's still frosty, and hardly free flowing, but demand is there.  When demand for capital is there, and a buck stands to be made, supply of capital will readily flow.

Jumbo Mortgage Rates Report- June 13, 2011

News which affects Jumbo mortgage rates:

International:  China says U.S. is already defaulting on its debt.  This has profound implications because it portends higher interest rates (in general) and higher mortgage rates (specifically).  Ironically, the Chinese seem to be echoing the tea party call for budget cuts rather than raising the federal debt limit.

National:  The US "War on Drugs" is failing and its costs contribute to federal spending.  Former Secretary of State George Schultz and Former Federal Reserve Chairman Paul Volcker point out that our domestic policy has inhibited governance and economic development.

California:  Is your neighbor pulling a fast one, by "short-selling" his home, only to by it back a year later at a much reduced price?  Lew Sichelman answers this Palm Springs home owner about the how the practice of flopping may catch up with the seller...down the road

Jumbo Mortgage Rate Indications, as of June 13, 2011:

• 5/1 ARM----------4.000%/4.210% APR
• 7/1 ARM----------4.375%/4.571%APR
• 10/1 ARM---------4.625%/4.807%APR
• 30 Yr Fix----------5.125%?5.557%APR

Jumbo mortgage rates quoted are for loan amounts from $700,000 to $2,000,000.  Credit, down payment, and income restrictions apply.  Not all will qualify.  Equal Opportunity Lender.  NMLS ID 339261

Jumbo Mortgage Capital for California

Much of my time, since April 16, 2011 has been spent meeting with secondary mortgage market investors, to develop a jumbo mortgage product.  We see a good opportunity to serve a neglected niche of people by developing relationships with "private capital sources":  credit unions, hedge funds, pension fund managers, and private investors.  We think, as much as the government has hijacked the lending business, that there is private sector capital willing to lend money for the right yield.

This project is a byproduct of a conversation I had with Anthony Randazzo, at the Reason Foundation dinner in Laguna Niquel.  Mr Randazzo is one of the leading voices in Washington DC in the effort to kick the government out of the mortgage business.  He explains why a truly free mortgage market is not only just policy for the taxpayers but is the answer to long-term stability in housing:

At a hearing in February, Mr. Frank changed his tune, calling for “abolishing Fannie Mae and Freddie Mac in their current form and coming up with a whole new system of housing finance.”

He’s half-right. The answer is to abolish Fannie and Freddie. But the government should stop there. We don’t need a “whole new system of housing finance.” The federal government doesn’t need to be involved in the mortgage business at all. Plenty of healthy, viable banks are willing to do that.

The central role that Fannie Mae and Freddie Mac played in the financial crisis shouldn’t be ignored. Without the lowered lending standards at Fannie and Freddie, mortgage originators would have paid more attention to the loans they were issuing, because the risk wouldn’t have been shifted onto taxpayers so easily. And without the failure of Fannie and Freddie in September 2008, the market might not have destabilized, leading to the bankruptcy of Lehman Brothers, the quasi-nationalization of AIG and, eventually, the bailout of the financial industry

I thought I was the lone capitalist voice in a market dominated by Wall Street welfare queens.  Naturally, Randazzo's work inspired me to action.   Yesterday, World Wide Credit Corporation  organized a division to provide "capitalist solutions" to the California mortgage market and we named it Jumbo Mortgage Capital.  We've identified non-traditional lending sources, normally eschewed by most local lenders, and can offer the following products to California home buyers and owners:

• fixed-term ARMs, for loan amounts up to $4,000,000 (fixed terms range from 3 years to 10 years)
• 30-year fixed-rate loans for loan amounts up to $4,000,000
• stated-income jumbo mortgage loans for loan amounts up to $2,000,000
• stand-alone Home Equity Lines of Credit up to $500,000
• jumbo mortgage solutions, with just 10% down payment, up to $1,000,000

Stay tuned for more information here.