Investment Mortgage Guy » Bank Facts

Wells Fargo Exits the Investment Property Loan Market

admin — Sat, 13 Mar 2010 22:47:47 +0000

I got into work on Monday and see an urgent email from our secondary marketing department (the department at our company that works with all of our lenders) that stated Wells Fargo was not going to purchase ANY more of our Non-Owner Occupied Loans. Even the ones we had already locked! Apparently with the new RESPA laws that went into place, they are concerned that they may improperly classify a loan as an investment property that might actually be a second home where tighter regulations are required. The new RESPA law states that if there is a change in the Truth in Lending document that is greater than .125%, you must re-disclose this change to the client. Income producing loans (or investment property loans) are excluded from having to re-disclose. Wells is nervous that they may have to classify a loan as an investment property for underwriting purposes but in reality it’s a second home to the borrower. If there is a change on the Truth in Lending of more than .125% in this case, the borrower may be in a strong position to state Wells violated the RESPA law. Wells has decided to take the conservative approach with some of it correspondent channels. All retail departments and some correspondent channels remain unchanged. (And are still writing investment property loans) So far, no other major lenders have gone similar policy.

This is just one more example of how Government intervention is changing the appetite for lending.

Construction Financing with 3.5% Down Payment

admin — Fri, 19 Feb 2010 03:23:29 +0000

Cornerstone Mortgage is proud to announce the new release of a construction financing package that requires only a 3.5% cash investment.

Here are the highlights of the program:

* 3.5% minimum cash investment

* 680 Minimum credit score

* 40% Debt to income ratio

* Owner occupied loans only

* Properties located in MN only

* Loan amounts up to $350,000

This program is a great step in helping boost new construction sales right here in the Twin Cities. Lot prices are reasonable again and construction costs are very affordable. The biggest barrier for most buyers looking at new construction in 2010 has been financing. Many builders in this ecomony have elected to have the buyer finance the construction loan but until now, most banks required at least 20% down. This program should help bridge that gap.

This construction loan is designed to be taken out with permanent financing in 90 days. (We can facilitate that too). We will allow for up to 2 draws during the construction process. Funds will only be disbursed on finished work. Upfront costs will have to be funded by the builder or borrower.

If your a builder looking for a partner or a buyer looking to start the financing process, give me a call at 651-485-3710 or email me at rbonahoom@houseloan.com

Refinancing Your Investment Property with DU Refi Plus

admin — Wed, 02 Dec 2009 04:53:47 +0000

Many investors have contacted me with the drop in interest rates to see if I can help them refinance their investment property. Unfortunately for most, the equity position in their property is too negative for me too help. Fannie Mae however, has implemented a program called DU Refi Plus to try and help the real estate investor take advantage of these lower rates through refinancing. If your loan is currently backed by Fannie Mae, (to find out if your loan is backed by Fannie Mae Click Here) my firm will go up to a 95% Loan to current value and refinance your loan without any mortgage insurance.

Here are some of the stipulations and highlights:

* No Mortgage lates in the last 12 months.

* No limit on the number of financed properties you currently have – This is really nice!

* Your current mortgage cannot have mortgage insurance on it or you have to contact your current servicer for the refinance.

To get a quick estimate of your property’s current value, I like to go to www.zillow.com

This program will benefit only a small handful of the investors out there looking for low long-term rates, however, maybe your one of the lucky ones who will fit.

For an analysis of your property, please give me a call at 651-485-3710.

Finding a Lender That Has Embraced Fannie’s 10 Financed Property Guidelines

admin — Mon, 10 Aug 2009 05:17:35 +0000

In February 2009, Fannie Mae reversed an earlier October 2008 ruling where they limited the number of properties an investor could have financed to 4. Fannie made it clear in the announcement that they were in support of helping the suffering housing market and that they were serious about financing loans for good risk borrowers who wanted to buy investment real estate. There was a loud cheer from investors around the country. Finally, a decision that made sense!

Now it’s late August 2009, six months after Fannie’s annoucement, and very few lenders have decided to take Fannie up on it’s generous offer. Call it fear or something else, at the end of the day, lenders like Wells Fargo and JP Morgan Chase who are actually making the loans to consumers decide which policies they want to adopt and thus far, lending on more than 4 financed properties is not one of them.

I work for Cornerstone Mortgage, a Houston based company that funds about $150 million in loans monthly. We have lending relationships with every major lender in the country and so far, none of them are allowing us to originate borrowers with more than 4 financed properties through our normal correspondent lending channels.

I can however broker them, currently, I have two outlets on the broker side. The downfall of brokering loans is that I have no control over the appraisal or underwriting. The loan gets shipped and underwritten by people who don’t know me or my clients and sometimes even my market. I don’t like to do this, but right now. it’s the only option I have.

Hopefully soon, the lenders will follow Fannie’s guidance and start lending on these loans again.

Make is a great day!

Rob Bonahoom

Mortgage Coach

952-808-2820.

Your Favorite Lender in Half the Time

admin — Mon, 18 May 2009 03:46:08 +0000

We are close to half way through 2009 and we have seen rates lower than they have been in a long time. Many homeowners have been able to take advantage of rates in the 4% range. Lenders are busy again all over the country. The concerns for refinancing today are different than those of previous refinance booms. The number one question people ask me today is, “who are you selling my mortgage to?” The fear of a lender failing has never been more top of mind and many of my clients are very concerned about being in the hands of the next bank to go under. A few years ago, people really didn’t care who their mortgage was with and even the lenders themselves, traded paper (which is your mortgage) back and forth like it was going out of style.

Many of my clients have a particular lender they would prefer to have their mortgage with long-term either because they have other accounts there or have always had their mortgage there in the past and they are comfortable with it. The problem is that if they were to go direct to there favorite mortgage lender, they are running 60 to 90 days to complete a refinance right now. Some banks are so busy right now they won’t return your call even if your willing to wait. Lenders are way under staffed for their work load but are afraid to hire more people in this economy. The problem with that is they won’t lock you in until 30 days before closing. With rates as volatile as they are right now, you could lose out on a great rate waiting for your lender of choice to get your loan closed.

At Cornerstone Mortgage, we underwrite and fund all of our loans but sell most of them to other banks. We have relationships with Wells Fargo, US Bank, Citi, Bank of America, Chase, GMAC and several others. Our business model allows us to close your refinance in 30 days or less and we can sell directly to the lender of your choice. You truly can have your cake and eat it too!

For more information on how this works, give me a call at 952-808-2820.

Rob Bonahoom

Morgage Coach

Fannie and Freddie Implement New Appraisal Requirements

admin — Mon, 04 May 2009 03:39:17 +0000

Starting May 1st, Fannie Mae and Freddie Mac will be implementing a new Home Value Code of Conduct (HVCC) policy on all appraisals. Back on March 3rd, 2008 Fannie Mae announced that it had entered into an agreement with the Office of Federal Housing Enterprise Oversight (OFHEO) and the New York Attorney General adopting the HVCC. The HVCC was adopted to help reinforce the independence of the appraisal process as well as to enhance the overall integrity and confidence in the national housing finance system. All mortgage lenders thoughout the United States will be required to abide by this new policy. Federally chartered banks already implemented this policy in 2008.

Basically this new policy means that loan orginators like myself will no longer be allowed to choose which appraiser we will use to complete an appraisal and the appraiser will no longer be given a “target value” that needs to be hit. This could mean that a borrower may have to spend up to $650 (for a duplex appraisal) only to find out that the value is too low for him to refinance. In the past, “comp checks” were used by loan officers to help a borrower get a fairly accurate idea of the value of their property before spending any money on a refinance. This new law will prohibit the abilty to do comp checks.

To view a full copy of this policy click below:

NEW HVCC CODE

The mortgage industry continues to tighten guidelines in order to give investors (on Wall Street) more confidence in the quaility of the loans being written. Have they gone too far this time or do you feel this is a good integrity check for appraised values?

Rob Bonahoom

Mortgage Coach

Fannie Mae Offers Real Estate Investors a New Program at 10% Down

admin — Sat, 21 Mar 2009 05:17:42 +0000

I continue to be impressed at Fannie Mae’s willingness to find creative ways to get more real estate investors into more investment properties in an effort to stimulate our suffering housing market.

Fannie Mae has created a new investment property financing program called Fannie Mae Home Path. This program allows the real estate investor to purchase properties owned and backed by Fannie Mae (properties that are bank owned by Fannie Mae due to a previous foreclosure) at a 10% down payment with no appraisals or mortgage insurance required.

Not all Fannie Mae bank owned properties will qualify. To find out if the property you are interested in purchasing is approved for the program, please go to 10% Down Fannie Mae List.

A similar program is likely to come out for Freddie Mac. I am excited to see the government continue open up more doors for the real estate investor. If you would like more information about this program, feel free to contact me at 952-808-2820.

Rob Bonahoom

Mortgage Coach

How to Pull Cash Out on Your Investment Property

admin — Mon, 02 Mar 2009 21:06:51 +0000

One of the biggest questions I get from real estate investors from week to week as an investment property mortgage coach is: Can I pull cash out of my investment property?

I will come back to the answer of this question but first want to give you some back ground on investment property financing as a whole that I feel is important. About a year ago, there was several options available nationally for the real estate investor for investment property financing. Since October of 2008, all mortgage backed securities another than Fannie Mae and Freddie Mac have left the market. Wall Street at this point, is not trading them. What that means to you is that the only national source you have for financing your investment property is Fannie Mae or Freddie Mac. Out side of that, your option would be to approach a local bank.

Fannie Mae and Freddie Mac require six months seasoning (meaning you have to have owned the property for at least six months) before you can refinance your property. After six months, you are allowed to use the appraised value of your property and borrow up to 75% of it.

Piggy backing on this question, I also get asked all the time from investors: Can I get a second mortgage or line of credit on my investment property? At this point in time, I am not aware of any lender offering mortgages in second position of your investment property. The credit market has definately tightened.

This is a big problem for the real estate investor who has been using cash or a line of credit to purchase investment properties. Many of these investors relied heavily on quick refinances to keep themselves liquid and ready for the next oppportunity. My rehab loan program is a nice alternative to this. With my rehab loan program, an investor is able to finance both the purchase and rehabilitation of his investment property and then do a rate and term refinance with Fannie Mae (which still has no seasoning). To learn more about my rehab program select the other articles available on my blog or review the tab at the top of my website.

Have a great week!

Rob Bonahoom

Mortgage Coach

Fannie Mae Increases the Number of Financed Investment Properties Back to 10

admin — Sat, 07 Feb 2009 05:51:55 +0000

Fannie Mae makes an announcement today to raise the number of financed investment properties back to ten. Since October of 2008, Fannie Mae had lowered the number of financed investment properties a borrower could have to three. Starting again March 1st, 2009, the limit will go back up to 10 properties. This is BIG news to the real estate investor. I think we all knew that going down to three financed properties was too aggressive of a move. Fannie Mae sites it’s reason for the change as a means to help with the housing recovery effort. There will be however tighter guidelines and restrictions from the previous rules Below are the new guidelines for financed properties from number 5 thru 10.

* The minimum credit score goes to 720

* 75% LTV for a Purchase and 70% LTV on a Limited Cash Out for 1 unit properties

* 70% LTV for a Purchase or Limited Cash out on 2-4 unit properties

* No Bankruptcies or Foreclosures for 7 years

* No deliquencies within the last 12 months on any mortgages

* In order to count the rental income from other rental properties the investor has, a two year look back is required from the borrowers Federal income tax returns.

* 6 months reserves will be required on each investment property that you own and the subject property.

This is awesome news and proves that Fannie Mae is truly committed to the real estate investor and fixing the housing crisis. If you would like more information please contact me at 952-808-2820.

Rob Bonahoom

Mortgage Coach

How do I Finance Over 4 Investment Properties?

admin — Sun, 18 Jan 2009 05:28:28 +0000

One of the biggest challenges with investing in real estate in 2009 is financing. Financing has become much more difficult and for many investors, there are no viable options. The credit market is very tight. Fannie Mae and Freddie Mac are the only national sources left for financing investment properties. Even so, if you have over 4 financed properties, you won’t qualify with them. In October, they modified their guidelines down from a total of 10 financed properties. So what is the real estate investor to do?

Local banks have become a viable option for investors with more than 4 financed properties. A local bank is going to look even harder than Fannie Mae or Freddie Mac at your credit profile and liquidity, but if you fit the box, they will lend you the money. The terms with local banks are very simillar from bank to bank. Rates are typically 7% with a 20-year amortization and a 5-year balloon. The down payment right now is the same as Fannie Mae and Freddie Mac at 25%. Many local banks got hurt with some bad properties druing the last few years and aren’t real keen on working with people who want to invest in real estate. This is where I can help. I have developed key relationships with Banks from around the Twin Cities who are still interested and excited about lending to the real estate investor. For a broker fee, I will match you up with the local bank that I think has the best option for you to accomplish your financing needs.

You can reach me at 952-808-2820.

Rob Bonahoom

Mortgage Coach