BradyLoan.com

FHA To Lower Owner Occupancy to 35% For Condo Approvals?

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.

 

 

 

Your agent is why your condo isn't selling

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.

Avoid These Common Mistake When You List a Condo

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.

Can We Do FHA Spot Approvals for a San Diego Complex?

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:

1. HUD Review and Approval Process (HRAP)-- this is where the package of the HOA's legal and financial documents are  sent to the HUD Home Ownership center in Santa Ana for review and approval.  This can take up to 30 days and we would need 45-60 days to close the FHA loan
2. Direct Endorsement Lender Review and Approval Process (DELRAP)-- this is where the HOA's legal and financial documents are reviewed by an FHA "approved" underwriter.  HUD "delegates"  authority to underwriters, with a HUD certification, to approve the complex.  This takes 3-4 days and we can close the FHA loan within 30 days.

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: 

 

• By Laws
• Articles of Incorporation (or Association)
• CC&Rs
• Approved Budget
• Balance Sheet, dated within 30 days of submission
• Income Statement, dated within 30 days of submission
• Cash Flow Statement, dated within 30 days of submission
• Condo Questionnaire
• Recent reserve study (unless at least 20% of the budget is going towards reserves

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:

1. The owner-occupancy ration is below 50% at the time escrow was opened
2. There is pending litigation

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.

These Three Reasons Are Why a Marine Fired His San Diego Real Estate Agent

I see this happen a lot in San Diego.  A real estate agent finds a new buyer who is serving in the military.  That new client wants to buy a condominium with his VA-guaranteed loan benefit but the agent doesn’t know what to do.  In the end, the he fires the agent—here is how it happens:

The agent starts off by showing the veteran all of the VA-approved condo complexes.  The buyer finds a great property in a complex which isn’t approved by the VA.   The agent reluctantly shows the property and the buyer loves it.  The agent asks his lender about a “spot approval” from the VA.  There is no such thing so the lender looks into getting the complex VA approved—he thinks it will take 60-90 days.  The lender tries to offer the veteran a more costly FHA loan with 3.5% down payment and PMI.   The veteran loses the property and fires the real estate agent.  When asked why the veteran fired the real estate agent, these are the three reasons he gave:

1- The agent didn’t want to show me all of the available properties in my price range.
2- The agent and the lender tried to get me to do a more costly loan
3- The agent doesn’t understand veterans or active-duty military buyers

If you are a real estate agent, that doesn’t have to happen to you.

Many of those military buyers and veterans google “VA condo approval” and find us.  We’ve financed over 1000 VA loans in the past 15 years;--close to 100 of those transactions were for condominiums which did not have a VA approval.  We secure the complex approval from the VA (sometimes in less than 21 days), process the VA loan, and typically close these transactions in less than 45 days.

Who are we and why can we do what few other lenders can with VA condominiums?

Debra Brady is an experienced loan originator with World Wide Credit Corp.  Her husband Brian is a NAR-designated “Military Relocation Professional” and Managing Director with World Wide Credit Corp.  They have a combined 27 years experience in residential lending and have glowing reviews, specifically talking about their expertise in VA home loans, on Yelp.  World Wide Credit Corp is a VA-approved direct lender, in business in the same Kearny Mesa office, since 1991.

If you have a VA buyer today, you might want to call us at 858-777-9751 and ask us a few questions.  Otherwise, you can subscribe to our weekly VA emails here.

San Diego Mortgage Rates Report for January 1, 2015

The mortgage bond market is currently at it's 2014 high price levels.  If prices hold, mortgage bonds will close 5% higher than they closed in 2013.  What this means to you is that retail mortgage rates should be about a half of percent lower than they were in December 2014.

This hasn't necessarily happened though.  Mortgage lenders have been wary to pass those bond market gains onto the consumer.  There is an "angst" that the party could end at any given time.  Conventional mortgage rates haven't improved as much as VA home loan or FHA mortgage rates have.  Still, I"m hopeful that next week will see rates more in line with the bond market gaints.

You can follow the national average mortgage rates at Bankrate.com.  San Diego mortgage rates tend to be .125% LOWER than the national average.  Average rates as of December 31, 2014:

30 Year fixed conventional average=  3.97%
15 Year fixed conventional average=   3.07%
30 year fixed VA/FHA average=               3.82%
30 year fixed VA/FHA jumbo avg.=       4.00%
5/1 adjustable rate conv. average=         3.13% -

How can this benefit you?  If you are shopping for a home in San Diego, having a full pre-approval will permit you to lock-in a rate as soon as you receive verbal acceptance of an offer rather than waiting for a contract.  If you currently own a home in Californis, it might make sense to review your mortgage with us today or Friday.  We can run quick numbers to see if it makes sense to restructure your home loan.  Call us at 858-777-9751.  We usually answer the phone right away (or call you back within an hour or two)

If you want to receive a text report of rates, every 10-20 days or so, text the word RATE to 313131 or subscribe to the mortgage rates report via text by adding your cell phone here

San Diego Mortgage Rates Report: September 1, 2014

Mortgage bonds have steadily strengthened since their August, 2014 levels, causing September mortgage rates in San Diego to drop.

You can follow the national average mortgage rates at Bankrate.com.  San Diego mortgage rates tend to be .125% LOWER than the national average.  Average rates as of August 1, 2014:

30 Year fixed conventional average=  4.06%
15 Year fixed conventional average=   3.17%
30 year fixed VA/FHA average=              3.65%
30 year fixed VA/FHA jumbo avg.=       4.0%
5/1 adjustable rate conv. average=         3.52%

We told you last month that San Diego home prices up but the price increases are decelerating.  While I believe that the long-term trend will track the increases in inflation, prices may soften through 2015.  I talked about this on Active Rain today and cited this Redfin article:

The first is a slowdown in home price growth. For the first time in five months, price growth was essentially flat in July. The second is a shift in pricing power from sellers to a more balanced market. That shift has been nearly nine months in the making from when sales began to first decline last November

Deals are going to be made this Fall.  If you're buying a home, you have some price flexibility.  Making offers 15-20% below asking price is almost as nutty as pricing your property $100,000 over recent solds but, without a doubt, buyers will be driving fall sales in San Diego. 

We can lock rates up to 60 days so, if you have to be flexibile with a seller who is trying to close on another house, we can cover you.  Make sure you get a good price concession for your flexibility.

San Diego Mortgage Rates Report-- February 7, 2014

Mortgage rates have remained stable this week.  While the week started off well, with the mortgage bond market rising over 1%, those gains haven't passed through to the mortgage rate sheets.  Lenders were cautious about the bond market optimism and their cautious approach was warranted.  The mortgage bond market gave back all of its gains and rate sheets have remained stable all week.

You can follow the national average mortgage rates at Bankrate.com.  San Diego mortgage rates tend to be .125% LOWER than the national average.  Average rates as of February 6, 2014:

30 Year fixed conventional average=  4.26%
15 Year fixed conventional average=  3.31%
30 year fixed VA/FHA average=           3.86%
30 year fixed VA/FHA jumbo avg.=      4.11%
5/1 adjustable rate conv. average=      3.49%

We now offer an 80/10/10 mortgage.  This means that a home buyer can put 10% down, get an 80% forst mortgage (up to $545,000) and a second mortgage for the difference between the 80% first loan and the 10% down payment.  Home buyers like this because it allows them to get approved without having to pay mortgage insurance. 

Home buyers must have a minmum credit score of 720 and the debt-to-income ratio can not exceed 43%.  First mortgage limits are $545,000 and the second mortgage limits are $500,000.  This can be helpful for home buyers who had to rely on a jumbo mortgage because jumbo loans require at least 20% down payment.  Now, San Diego home buyers, looking in the $750,000 range, won't need $150,000 down payment for a loan.  Under the 80/10/10 program, they could put down $75,000, get a first mortgage for $545,000, and a second mortgage for $130,000.

Subscribe to the mortgage rates report via text by adding your cell phone here.

San Diego Mortgage Rates Report: June 20, 2013

If you haven't been following mortgage rates, they are higher than they were in April--you can read all about the rise from 3%-4.25% here if you want the technical explanations.  But let's look at these last two months with a bit of perspective here.  Things ain't as bad as they seem to be.  Consider this chart:

 

 Now it's time to offer some perspective:

1- Mortgage rates were between 5.5% and 6.5% for the 5 year period between 2003-2008. Home prices were much higher than they are today and incomes (in inflation-adjusted dollars) were lower than today.

2- Unemployment is much higher today than that period.

3- Rates dropped a lot after the Fed's QE program was implemented, went from 5% to as low as 3% last month. Today, rates are in the low 4s which is mid-range for the last five year period and much lower than the previous 5-year period.

4- Home prices are barely at 2004 levels.

THOUGHTS:

1- if you are one of the 90% of Californians that have a job, you can probably buy a home--it will cost less than it would have cost you in 2004

2- the run up in rates might soften the inventory problem and there may be room to negotiate for closing costs help or price reductions from sellers.

3- rates are sometimes temporary (you can always refinance if rates drop) while price paid is permanent--take advantage of the expected softness in the market

VA Approved Condos in Solana Beach, Del Mar and Rancho Santa Fe

Solana Beach, CA has four condominium complexes which are approved for VA home loans as of September 28, 2012.  They are:

• La Mer
• Lomas Santa Fe Villas
• Santa Helena Park (I worked on this approval)
• Villa del Sol

Del Mar, CA has no condominium complexes which are VA approved and there is one complex pending in Rancho Santa Fe, CA.  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