All Forum Posts by: Chris Mason

 There's more to this story. What is it? 

Off the top of my head, a few things that I think would be examples of lawful discrimination.

- Employer is engaged in a federally illegal business, such as marijuana.

- Employer is a politically active pro life or pro choice organization, or a PAC of some sort. I've never had this come up on a transaction I personally worked on.

- Employer is immediate family, and the lender is only willing to calculate income on a two year average, rather than counting current salary at full value. (Dad wants daughter and son in law out of basement, so gives them a couple paychecks with $25k/mo on them as a "salary" so they can qualify for the mortgage)

- Employer is on the post-9/11 terrorism list, the acronym escapes me but I've had that come up.

 It depends.

You may have enough "day job" income to support both mortgages concurrently. Great.

FHA has weird rules about counting newly departing primary residence rental income. Often the best solution there is to buy the next one with conventional financing, 5% down being common.

Ah, this one. Yup you're not the first person this has happened to, and will not be the last. Due to all the COVID people, folks who entered the industry as a realtor or a loan officer after March 2020, I'll direct part of this response at them too.

How to idiot proof this issue as...

A Realtor: when you send the contract over to loan officer, make it one single PDF. That PDF should include the contract with any/all addenda, but should not include inspection reports, seller disclosures, or anything else like that. This way even if the loan officer is an idiot and prone to screwing up (maybe they were hired for the refi boom, and this is only the 2nd ever purchase transaction they've done?!), you've fixed it and made it idiot proof for him. EXTRA BONUS POINTS: some realtors have the template mass "in escrow" email they send to all parties, with everything spelled out. I'm almost entirely "paperless" at this point, but when I see one of those I do print it on physical paper, and it's the first thing I reference whenever I touch that transaction, and that transaction gets bumped to the front of the line each day when I walk into the office (the transaction with the daily "is the appraisal back yet? when do you expect it back? are we cleared to close? when do you expect that?" [and similar] phone calls and texts gets bumped to the BACK of the line each day).

A loan officer: when the realtor sends you a single PDF with all sorts of extra stuff you don't want to see, or 5 different piecemeal PDFs in 5 different e-mails, consolidate it into a single PDF that has exactly what you need, and none of what you don't. This way even if the realtor screws up (maybe they got their real estate license "because real estate is hot" in 2020 and they'd lost their previous job?!), you've fixed it and made it idiot proof. Regardless of if you are uploading the contract to a loan portal, sending it to your processor, or uploading it to the AMC website, it should be in 100% of cases a single PDF with all addenda and no extra fluff.

A consumer: make sure at least one of the two above parties isn't a noob. You can look up your realtor's license at the state real estate website (California example) and your loan officer's license history here (same for all states). Ideally neither is a COVID noob, but you need at least one of them to predate the pandemic, in order to prevent this and a thousand other stupid little issues that are overall a waste of your time.

A loan officer assistant or processor: assume the realtor, as well the loan officer that is your boss, are both complete idiots, triple check that one or both of them did the above. When you go to upload the purchase contract (to loan portal, to appraisal portal, to anything), it should be a single PDF, and you should have some double check assurances, one way or another ("this is a $755k purchase price, right?"), on the contract price.

An appraiser: verbally confirm agreed upon contract price with whichever realtor is opening the door for you. Don't do that sneaky ninja trick where you tell everyone you will be there at 11 AM, then show up at 9 AM and enter via lockbox because the MLS said it's vacant, and you don't want to talk to anyone, unless you want to get that annoying message requesting you revise the contract price upwards $15k to match an addenda that no one sent to you. Ideally you should only see a single PDF that's the contract, but check for multiple PDFs just in case. Naturally, you need to assume both realtors, the loan officer, and the loan processor, are all idiots, at all times (if you're an appraiser, I likely do not need to tell you that :P ).

This issue "should" be pretty rare, since literally 5 people in a row had to screw something up and/or fail to perform a best practice (it happens when all 5 get complacent and assume "that's someone else's job" or "someone else will do it," since we have here multiple parties who could ALL articulate an argument for why it "shouldn't" be "their" job to do it), but the only fix any one person can do, is assume the other 3 or 4 people are idiots, and plan accordingly, on every single transaction they touch. 

It'll be a small regional bank near you, if anything. They got excluded from some of the Dodd Frank rules that came out after 2008. They aren't going to advertise it heavily, so you will need to do some dialing for dollars to find them.

Local to me what you'd be looking at, just to give you an idea of what may be out there:

- 75% CLTV max

- $100k max

- Stated income / no appraisal

- Crappy rate, reflecting the risk

- SFR owner occ

- Picky about zip codes

Hello fellow mature adults, I submit for your approval the following: 

I call it: "Wife sends husband to work, to earn the money, to pay the rent."

Note: I have no idea the answer to OP's question, the above image simply jumped into my head when I read the thread title, and I couldn't help it. :)

Call a local mortgage broker for a 2nd opinion. 

Location specific, in California numbers like $250k are tossed about as a ballpark. 

Note: SFR + ADU does not a duplex make. Until about a month ago, SFR+ADU was financed identically to a SFR, and duplex was it's own category. Now the rules are a little more lax, SFR, SFR+ADU, and duplex, are 3 distinct categories.

 2-4 unit is residential real estate, so the same norms apply. The expectation will be that you're preapproved prior to even asking questions about the properties, since otherwise you're statistically likely to be a tire kicker and time waster.

5+ unit is commercial, different norms apply there. In that space, preapproval does not exist. A letter of intent detailing why you feel you'd be able to get a commercial mortgage, and proof of funds, is the norm. 

Not sure why anyone is surprised that STR financing is tightening up.

Hotels and gambling are hardest hit during recessions. STR is an emerging segment of the hotel world, but still well within in that "surplus disposable income spending" world.

Anyways, bigger picture. Rates are up to curb inflation. It goes without saying that once inflation is curbed, rates will come back down. Then the money will get loose/easy again. Probably not to 2020/2021 levels, but back to the 2018/2019 baseline, anyone's guess if that means consumer facing owner occ mortgage rates that start with a 3, or a 4. 

The opportunity right now is less buyer competition. "Average John and Average Sally" probably watch CNN, have never thought of inflation and rates as related, and think 6.XX% is here permanently. Someone paying closer attention will be aware that they're just going to refinance whatever they buy in a year or 3, so the current rate is not actually relevant to anything, what is relevant is being able to buy with less buyer competition. 

And if you want to "risk big to win big," mortgage stocks are all currently in the gutter, a CRAP ton below the overall market, relative to when they all IPO'd via SPAC. The mortgage industry was raking in juicy refi profits for 2 years, and just at the tippy top of that is when the all IPO'd or SPAC'd, when investors who know zero about mortgages were focused on quarterly profits, incapable of zooming out and considering broader patterns. 

Those stocks have all fallen to the gutter since then, losing in almost all cases over 75% of their value relative to IPO/SPAC month. A completely shameless "pump and dump," more or less. 

But they MAY recover whenever the economy and real estate picks back up.

For example: 

UWMC is a stock currently paying, at current cheapo share price due to being in the absolute gutter, a dividend north of 12%. This is the largest purchase lender in the country by volume, #2 in it's respective "too big to fail" industry, and it's paying 12% just on the dividend! (Each share is $3.22 as of this post, and pays out $0.40 per share per year, $0.40 / $3.22 = 12.4%) The CEO and his immediate family, of this >30 year old company that's #2 in it's space, owns 94% of all shares. So they could totally cut off that dividend... and for every $6 it saves them, it'll cost them $94.

For example. There are a bunch of other mortgage stocks with a very similar story, IPO'd to much hype, standard pump-and-dump, current share price in the gutter, can't get much lower, sexy divvys, etc. 

That's a "risk big, win big... or lose big" play. Who knows. Don't even entertain this post, until you've executed on the previous post of mine. :)