We can get a feel for how much the market is struggling based on the types of financing that are needed to keep homes selling.
When it’s hot, all we need is a 30-year fixed-rate mortgage.
What loan programs are available today?
Everything except a neg-am, and only because they were outlawed!
A lender solicited my business yesterday, so I asked him to send me a list of what he can do – decide for yourself, but it appears we are searching under every rock for potential buyers now:
Thanks for taking my call. I’m looking forward to helping you close more deals!
- Asset depletion – We have the most aggressive program in the business. For every $1MM in assets, we give $16,666/month in income. Other banks are half to a third of that amount.
- Foreign National Programs – no US Credit, no US Tax Returns, as little as 30% down, rates in low 5% range
- Just closed $1.5MM purchase in Carmel Valley with a client from Myanmar – easiest foreign national loan in the market
- Bridge loans (not hard money) –
- No need to be contingent upon sale. Use equity in current properties to buy without selling first
- Doesn’t need to be primary residence – can be second homes and investment properties too / great tool to get your investors to buy more property
- Just closed the largest one in San Diego for $6.5MM with NO MONEY DOWN
- Bank statement loans that actually work – we only look at the deposits (call all the people you know who are self-employed and writing everything off… now they can buy a house)
- I am in contract now with a client for $1.6MM and she had a pre-foreclosure less than 2 year ago with just 15% down.
- As little as 10% down
I have a lot more loan programs to save your deals or help you get new ones into contract that need more creative financing.
If you need a bridge loan to purchase a vacation property you better be guaranteed to be getting a substantial inheritance and soon.
Full-doc mortgages = Two years tax returns, W-2s, pay-stubs last 30 days, and 2 months of bank statements, and 680 FICO
No-doc, circa 2006 = 700 FICO (and you could 100%-finance up to $1.5M)
RE: His bank-statement qualifying, which I love because it more accurately reflects the actual income deposited into the bank, and if a bank underwriter was smart, they’d take a peek at the out-going expenses too to really get a feel for stability. But let’s call it what it is: almost-no-doc, and a borrower should at least have good credit and a healthy down payment.
This is a little short of that:
I am in contract now with a client for $1.6MM and she had a pre-foreclosure less than 2 year ago with just 15% down.
If the buyer gets in trouble again, like they did LESS THAN TWO YEARS AGO, and starts missing payments…..and prices dip a measly 5%…..then there is virtually no equity/no skin in the game if owner or lender has to re-sell after paying closing costs.
When a homeowner has nothing left to live for, they are much more likely to work the system, get the free rent, and bail out down the road.
But maybe lenders have forgotten about those days? This one got a reminder:
The amount borrowed in 2007 was $1,750,000, and when they went to trustee sale, the amount needed to cover the balance owed plus costs was $2,772,007. Over a million dollars higher? They must not have made payments for years! Now the bank is hoping to get nearly the same for a house that backs to the I-5 down below:
The former owners paid $975,000 in 2005, and two years later borrowed $1,750,000?? Cashed-out $800,000?
I hope Angelo Mozilo wasn’t surprised this loan came back to him – oh wait, he sold it to Bank of New York/Mellon and retired to a life of daily golf instead.
The market got to churn or nobody makes any money. Its looking a lot like the market is nearing the bad angle of attack. What happens then?
Ever since the refi market dried up they only money to be made is in new loans.
I have been out of the country since 2010 so it is hard to get a feel for things like I had in 2006 (living in SD) and the forthcoming disaster was pretty clear to see.
Can you do a post of any similarities and differences between 2018 behavior and 2006 behavior? Mainly, what do you see as far as the human behavior and mental thought processes? Do people still have PTSD from 2008? Anyone still licking wounds? Or do we just have a new breed of buyers? Or maybe you see the same stuff as 2006 but just not on such a large scale?
The biggest change is today buyers are thinking long-term only, and maybe forever.
Back in the day when there was always plenty of homes for sale at reasonable prices, buyers bought for the short-term, thinking they could always move up or down without much trouble.
It’s a monumental shift for the business. I have to be much more proficient in finding new clients!