All Forum Posts by: Chris Mason

Take all the junk fees that wouldn't exist but for there being a mortgage, add them up, divide by 360, add that number to your monthly payment, and back into your APR.

I've done it like twice to make sure it wasn't witchcraft. 

It serves limited function because it is applied very inconsistently across types of credit. For example if I charged you 3% of loan amount up-front, that would be an APR fee (and you might shoot me). But when a credit card company charges 3% of loan amount as a "balance transfer fee" up-front, that is not an APR fee - hence them advertising "0% APR for 18 months!"

> Cruz specifically due to a 15% flat tax.

The executive branch does not make laws. When was the last time a candidate's grandiose legislative budget proposal actually made it into law?

The closest I can think of is Obamacare, which actually ended up resembling what Hillary promised to do during the primaries more than it did what Obama proposed (individual mandate was a big Hillary promise). So all the people that voted Obama in the primary because they liked his healthcare proposal (no mandate) better than Hillary's (yes mandate)... whoops!

Going to laugh my butt off if Hillary now turns around and proposes to reform/fix/whatever the individual mandate portion of Obamacare. 

Anyways, back to flat 15%: Would it be good for real estate if landlords lost those tax incentives to improve and maintain their properties? I kind of think it's (arguably) a good thing that landlords get tax write-offs for maintenance/improvements to their portfolio. We've got a nominal base tax rate on rental income way higher than 15%, but you have the option of picking your effective actual tax rate on rental income by spending as much (or as little) of that rental income on improving and maintaining your property as you wish!

I don't have nearly enough regulation and TRID and CFPB in my life as a mortgage lender, and all of you certainly want higher investment property interest rates and more restrictive investment property guidelines, so SANDERS ALL THE WAY BABY!

You may get past the loan originator (gatekeeper, in part) with your "look I have a W2!" but it's not going to make it through underwriting without being treated as self-employment income (you own more than 24.99% of the entity paying you), requiring a 2 tax year average to calculate income, in almost all cases. 

Pick whatever structure you wish for your business, and in January of 2017 you can file your taxes, yielding the necessary 2 tax year average.

Really you should be looking for a local lender that is forward thinking and strategic enough to realize that if they help you structure your documented income in the most advantageous way, there's business in it for them in 2017.

@Jason Risley

Lender here, traditional/conventional type. A few tricks:

* If married: start splitting properties up so that both the loan AND title for some are in her name only as "....a married woman, as her sole and separate property" and some yours. If you both have the credit/income, this alone increases the cap to 20 financed properties. California is a Community Property state, so the implications of divorce or death aren't nearly as significant in non-CP states (but I'm not a divorce lawyer, so please qualify that with your lawyer). 

* If you've got sufficient equity, start shoving as much debt as possible into as few properties as possible. We look at number of "financed properties," not number of properties. Cash out refinance on one property to pay off the mortgage of another entirely, and boom you now have 1 fewer financed property. (EDIT: if your equity position isn't quite that sexy, you can of course cash out 2-3 to pay #4 off entirely. And so on)

* If one or two of these is in some mixed zoning area, get it zoned commercial and get the appropriate financing too. Commercial doesn't count towards limit. In general as you buy and well, diversifying a little bit into commercial will free up what you can do in residential.

* Use crappy financing. 

I've used trick #1 and #2 above, never used trick #3 as I don't do commercial. 

Hi @Scott Price,

Thank you for that thorough answer.

Please entertain a hypothetical for me.

Your FICO goes down 100 points because you purchased drugs on your credit card, missed a bunch of CC payments, and the financials you provide are written on a bar napkin. You do not care about future loans from this lender, so when they ask for additional information or whatever, you do more bar napkin ********. Or maybe you have you accountant do the bare minimum to check the lawfully required boxes.

What can the lender ACTUALLY do, given that you have a perfect payment history, other than deny future loan applications and pull your credit once a year to confirm that your FICO score is still below 500?

EDIT: as a residential lender, nothing can be done. You could actually completely ignore all of these requests for information that wasn't available when your loan funded, and be perfectly OK.

I have a client that owns six investment properties, that is himself a renter.

He lives in a rent controlled apartment in San Francisco, and has lived there for about 15 years. His rent is ballpark fixed relative to inflation based on rents 15 years ago, at the expense of his personal landlord.

His investment properties are all in cities that do NOT have rent control. His rental income as a landlord is continually exploding all over the place, in a good way. 

His debt-to-income ratio gets lower and lower each year that passes (& with each property he purchases), while his landlord's DTI presumably goes up and up each year thanks to him.

Where would you folks say he is on the "evil genius" scale of 1-10? Eight or nine? 

FHA handbook: http://portal.hud.gov/hudportal/documents/huddoc?i...

FHA letters: http://portal.hud.gov/hudportal/HUD?src=/program_o...

If it's not in there, it's not an FHA thing. It may be a lender-specific overlay that your specific bank made up. Or it may very well be a new FHA guideline that I'm unaware of, just as you are being told.

Guidelines are real. However another thing that is real is saying that a lender-specific overlay comes from FHA/Fannie/Freddie/whatever.

No one wants to say "Oh, it's OK per the guidelines. But my employer made up a stupid rule, and you placed your trust in me to know what my employer is up to, but I didn't, so now we can't do your loan at the last minute" or (if a mortgage broker and brokering) "Oh, it's OK per the guidelines. But I made the choice to pick a lender to broker your proposed loan to that will refuse to do it because they have an overlay that I forgot or didn't know about, and now at the 10 yard line realized that I screwed up and can't do your loan."

So enter, stage left, the "new guideline" that just came into effect 7 days ago, that no one can show you a copy of dated 7 days ago, and THAT'S the reason your loan is jammed up.

 (New to BP here)

You're coming down from Antioch. There isn't a similar meet-up in the East Bay proper?