Sun Pacific Investor Quarterly Volume 7 Issue 3

A Newsletter for Investors in Trust Deeds

Volume 7 Issue 3

Integrity KnowledgeHonesty April 2011

HARD MONEY INVESTOR SEMINAR

Attend this informal discussion of current regulations impacting Hard Money Investments. Tuesday – May 9th @ 5:30 pm at the offices of Sun Pacific Mortgage – 800 Mendocino Avenue #2, Santa Rosa. RSVP please to Ari, Forest or Lynn.

SPECIAL GUEST SPEAKER: Santa Rosa Attorney Max Broome will be there to participate in the discussions and answer your questions from a legal perspective.

Message from the Broker…

So much change has been wrought in the lending industry since what has been deemed the “mortgage debacle”. With the dust somewhat settling on the new lending landscape I thought it time to inform Investors of just a few of the regulatory changes impacting Hard Money. These changes impact the Borrower, the Mortgage Broker and the Investor.

PREDATORY LENDING

I have to admit that I’ve been doing these Hard Money loans for years and I thought the Feds had labeled them Predatory Loans. In really digging in to the more recent laws that apply to these loans I made an interesting discovery for myself. These loans are not called Predatory Loans because they are high interest rate and high cost loans. Investors are not predatory lenders because they make private money loans. Predatory Lending is the practice of making a loan to someone that is not in their best interest. Or making a loan to them that does not have a tangible benefit. Or giving them a loan that is not the best loan available for their borrowing profile. Or bait and switch. Or no disclosures to them. Or an onerous prepayment penalty.

The Predatory Lending Laws have as their purpose the eradication of the patterns and practices of lenders that might be deemed predatory.

I personally think it was the federal and of course overblown response to the few bad eggs who were predators with their patterns and practices as mentioned above. Those guys are likely out of business but the remaining mortgage lenders (this means you) are left with the cumbersome compliances that were designed to keep those already chased out of business from harming borrowers further.

AFTER FURTHER REVIEW…

PREDATORY LENDING

The only area I can see for improvement in my own operation is the interest rate we charge borrowers. It is usually 12%, which is not at all

predatory. What may approach predatory per the intent of the feds is that we give that rate to everyone. The practice of giving a borrower who has 50% loan to value the same rate as someone who is at 75% loan to value is borderline in my new view of what the feds are looking for. That gap magnifies when you look at ability to repay, which the feds also now mandate the lender look at.

And I mentioned at my last Seminar the fact that the feds deem the person actually putting out the money as the lender. Not the Broker. So you as the lender should be looking at your patterns and practices.

SUMMARY…

From my review of the regulations currently plaguing us, there is nothing I have seen that should stop you from making Hard Money loans.

I would suggest that the next time you get approached about doing a loan with a better loan to value or strong borrower or nicer property, that you think about the rate you will require for that loan.

Your Broker should be compelled to do that on your behalf as a pattern and practice.

Feel free to call or email me anytime with further questions you may have regarding investing in Deeds of Trust.

Best,

Forest Tardibuono

Owner/Broker

Unique Identifier # 289456

forest@sunpacmortgage.com

Sun Pacific Mortgage & Real Estate (707) 523-2099

800 Mendocino Avenue #2, Santa Rosa, CA 95401

Visit us at: www.sunpacmortgage.com

Like us at: www.facebook.com/sunpacmortgage

Homebuyers Saving Grace!

The Guy In The White Hat Comes To Homebuyers’ Rescue!

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Ever since we opened our doors in Sonoma County in 1988, we’ve given extra care to round up people who have been “Turned Down Elsewhere?” – because of credit, income, the property or a combinations of these.

We are the local Hard Money Lender who can help rescue your deal…and get your Buyer into that Home!

Loan approval is based on just 2 criteria:

1. Good Down Payment

2. Ability to Repay

  • FAST private money purchase financing Sonoma County and contiguous Counties
  • FICO is not a factor
  • Up to 80% loan-to-value – Case by case basis
  • Loan amounts to $400,000
  • Investor and Owner Occupied financing
  • Lower rates with Good Compensating Factors– Case by case basis

SPECIAL NOTE: WE CAN DO A LOAN FOR SOMEONE FRESH OUT OF FORECLOSURE, BANKRUPTCY OR SHORT SALE!

Here are some Hard Money Buyers we have recently rescued…

Flipper – Short Sale Purchase – 80% Loan to Value (LTV) in Santa Rosa. Loan amount $160,000 on a fixer upper. 12% interest only for 12 months.

First Time Home Buyer Purchase – FUNDED IN JUST 10 DAYS! A conventional lender denied this loan. A real estate agent sent it to Sun Pacific. 50% LTV. Loan amount $90,000 at 12% interest only for 61 months. Monthly payment of $900.

Home Purchase – In Contract – Purchase price $149,000 with loan amount of $75,000. Buyer just got a loan modification after being in foreclosure on his home. He is renting out that home and buying a different one for way less money!

CALL FOREST at 523-2099

Or email him at forest@sunpacmortgage.com

See our regularly updated website at: www.sunpacmortgage.com

Special Edition: Sun Pacific Investor Quarterly

 

 

Special Edition

 

Sun Pacific Investor

Quarterly

A Newsletter for Investors in Trust Deeds

Volume 7 Issue 2      Integrity   Knowledge      Honesty      March 2011


 

Change – Change – Change

 

            So much change has been wrought in the lending industry since what has been deemed the “mortgage debacle”.  With the dust somewhat settling on the new lending landscape  I thought it time to inform Investors of just a few of the regulatory changes impacting Hard Money.  These changes impact the Borrower, the Mortgage Broker and the Investor. 

Nationwide Mortgage Licensing System (NMLS)

The Secure and Fair Enforcement for Mortgage Licensing Act of 2008 (the S.A.F.E. Act) requires the Office of the Comptroller of the Currency, the Board of Governors of the Federal Reserve Board, the Federal Deposit Insurance Corporation, the Office of Thrift Supervision, the National Credit Union Administration, and the Farm Credit Administration (collectively, the Agencies) to jointly develop and maintain a Federal registration system for those who engage in the business of residential mortgage loan origination. The statute requires these individual mortgage loan originators to be registered with the Nationwide Mortgage Licensing System and Registry (Registry), a database established previously by the Conference of State Bank Supervisors (CSBS) and the American Association of Residential Mortgage Regulators to support the licensing of mortgage loan originators by the States.

A direct result of the mortgage meltdown, NMLS was formed a few years ago to more fully qualify and register loan officers.  It operates independently from, for instance, the Department of Real Estate in California.  The term for a lender who has passed all the qualifications of the NMLS is a Mortgage Loan Originator (MLO). 

 

Some of the qualifications include…

·         Separate state and federal testing

·         Hours of qualifying Education

·         Criminal Background Check

Mortgage Brokers who have passed the above requirements receive a Unique Identifying Number.  Their company too must register with the NMLS and be given a Unique Identifier Number.  

Mortgage Loan Disclosure Statement (MLDS)

 HUD has issued revisions to the Real Estate Settlement Procedures Act (RESPA) (Regulation X) which became effective with loan applications taken on or after January 1, 2010. These important regulatory changes impact the Good Faith Estimate (GFE) and Housing and Urban Development (HUD) Settlement Statements (HUD-1 and HUD-1A) and will place new requirements on loan originators to ensure that borrowers are better positioned to understand their mortgage transaction.

Note that the MLDS and GFE apply to non-owner occupied loans now.  More on this in a future Issue. 

 

            Investors would do well to ask any Mortgage Broker they do a loan with for his or her Unique Identifier Numbers.  Also inquire if they provide the MLDS within 72 hours after taking any loan application.  It’s the law.

          Feel free to call or email me anytime with  further questions you may have regarding investing in Deeds of Trust.

                                    Best,

Forest Tardibuono

Owner/Broker

Unique Identifier # 289456

 
Sun Pacific Mortgage & Real Estate (707) 523-2099

800 Mendocino Avenue #2, Santa Rosa, CA 95401

www.sunpacmortgage.com

or email Forest at forest@sunpacmortgage.com

 

HARD MONEY INVESTOR SEMINAR

Attend this informal discussion of current regulations impacting Hard Money Investments.  Tuesday – March 22 @ 5:30 pm at the offices of Sun Pacific Mortgage – 800 Mendocino Avenue #2, Santa Rosa.  RSVP please to Ari, Forest or Lynn.

Homebuyers’ Rescue!

Guy In The White Hat

Comes To

Homebuyers’ Rescue!

     Ever since we opened our doors in Sonoma County in 1988, we’ve given extra care to round up people who have been “Turned Down Elsewhere?” – because of credit, income, the property or a combinations of these. 

     We are the local Hard Money Lender who can help rescue your deal…and get your Buyer into

                                  That Home!

     Here are some Hard Money Buyers we have recently rescued…

      Flipper – Short Sale Purchase – 80% Loan to Value (LTV) in Santa Rosa.  Loan amount $315,000 on a fixer upper.  12% interest only for 12 months.

      First Time Home Buyer Purchase – FUNDED IN JUST 10 DAYS!  A conventional lender denied this loan.  A real estate agent sent it to Sun Pacific.  50% LTV.  Loan amount $90,000 at 12% interest only for 60 months.  Monthly payment of $900. 

     First-time Homebuyer Purchase – 80% LTV in Santa Rosa, CA.  Loan amount $189,600 for 61 months interest only at 10.5%.  Monthly payment of $1,659.  *DREAM HOME with Million Dollar Views! 

     Home Purchase.  Purchase Price $550,000 in Sebastopol, CA.  Self-employed Buyer.  $325,000 loan amount to buy his DREAM HOME! 

    Loan approval based on just 2 criteria:

1. Good Down Payment

2. Ability to Repay

  • FAST private money purchase financing Sonoma County and contiguous Counties
  • FICO is not a factor
  • Up to 80% loan-to-value – Case by case basis
  • Loan amounts to $400,000
  • Investor and Owner Occupied financing
  • Can get you good lower rates – Case by case basis

PRIVATE MONEY Is that a good loan?

             As a Private Money lender for the last 20 years I have been asked many, many times – “Is that a good loan?”   Initially I would do the analysis of the house payment compared to 30 year fixed rates and the costs divided by the number of years they’d have the loan, blah, blah, blah.  Finally I just told them the simple truth, if it’s the only loan you can get.  That’s a good loan. 

            I’m not being flip here, but when your home loan application has been turned down by the 30 year fixed rate lenders, the credit union, the bank you’ve been at for umpteen years and your family won’t loan you money, the truth is the only program left is private money.  And that requires you have equity and an ability to repay the loan (if it’s your principal residence) or a down payment if the loan is to buy a principal residence.

            As of this date 2011, the lending standards nationwide have become so overly restrictive that to get a loan almost requires an act of Congress.  In actuality that is not far from the truth as the federal government now owns most of Fannie Mae and Freddie Mac.  They are trying to tighten up the standards to help the housing industry but they are actually messing up the works.  They sure will not go to bat for a homeowner who desperately needs a loan but if you can prove you don’t need it they will give you one.  Don’t get me started here!

         Private money loans are based largely on equity but you do need to be able to prove you can make the payment.  The most you will get is 70% of the value of the property.  If it’s worth $300,000 you will be able to get $210,000.  If you want a 100% loan, hard money will not work.

          Here’s a real example of a private money loan:  The borrower had almost all of the money to purchase a house.  She needed only $75,000.00 more – but didn’t qualify for a bank loan.  The purchase price was $231,000 and she only wanted to borrower 32% of the value.  This loan got done within 4 days for a quick close and she beat out other’s who put in offers for the house because she could quickly close.  Her house payment is now the payment on $75,000.

            Another example is a Contractor wanted to buy a dump house.  No bank would lend on it because it was so dilapidated.  The Contractor had enough money for a decent down payment and proved he had enough money to fix it up and resell.  He got a private money loan, was able to fix up the house and sell it within 4 months. 

            Is that a good loan?

Forest Tardibuono is a CA DRE Broker with over 23 years experience in real estate and lending.  His number is (707) 523-2099.  See website @ www.sunpacmortgage.com.

Like us on Facebook.com @ http://www.facebook.com/pages/Sun-Pacific-Mortgage-Real-Estate/178718062160113?v=wall#!/pages/Sun-Pacific-Mortgage-Real-Estate/178718062160113?sk=wall

THE TRUTH ABOUT LENDERS AND LOAN OFFICERS

The real theme of this article should be all the change- and it has been an avalanche – wrought by the government in recent years to handle something that simple attrition has fixed. The problematic players in the real estate debacle, both the banks and the unscrupulous loan agents have, in the main, fallen out of the business. I assure you that the ones who remain in business are more likely the true professionals who figured out the current lending environment and are still making a living within the ever tightening market.

The purpose of this article is twofold:

1. To encourage Buyers/Borrowers to find a loan agent that will competently represent them in getting the loan necessary to purchase a home or refinance and

2. To be prepared to dump any loan agent that demonstrates anything but number

1. Actually the main purpose for this article is to get the Buyers active in the market –IN SPITE OF ALL THE NEW REGULATION. As of January 2011, the main problem facing Buyers and those looking to refinance, are the too strict lending guidelines brought about by the governments legislative response to the real estate debacle of the last 5 years. I read a great article the other day written by a loan processor who worked for a busy lender. She said the new rules are restrictive and a horror but they are the current dictates. Quit griping about them and learn what they are so you can get the purchase or refinance done for that borrower. Griping about it solves nothing. Along that same vein, as a borrower, the new regulations are here to stay and you will have to deal with them to be a borrower, whether you are buying or refinancing. Do not be chilled by the fact of tighter regulations. Get out there and find out what you can do. Then do it or get a plan for doing it. “The only thing to fear is fear itself.” (Franklin D. Roosevelt 1933)

So I mention the current strict guidelines as the main problem, but it filters down to the banks that actually are on the streets with the loan programs that must meet those guidelines and the loan officers who still have to sell those programs, however restrictive (oops! I forgot I’m going to stop griping). To keep it really simple, you will really not know if the loan officer you have chosen to do your purchase or refinance is worth a darn until you get into the transaction. As soon as you get the feeling that they are stopping your transaction from going smoothly or outright putting problem after problem in your path, grab your file and try again elsewhere.

You are hitting up against a problem with the loan officer not knowing what is going on with the current underwriting guidelines, the guidelines from the bank being overly restrictive for what the regulations actually call for, the way they have to deal with appraisals is killing your deal, etc. Whatever it may be, you will know if it feels uncontrollable. This is the time to at least start looking around to see if the problem you are encountering with that lender/loan officer can be solved by a competing lender. You know, years ago I would never have suggested that you look elsewhere once in process on a loan. But the current lending environment is completely wacko right now and it should compel a buyer/borrower to operate differently to get the job done competently.

THE GOOD, THE BAD AND THE UGLY The truth about Real Estate & Loan Agents

 The purpose of this article is twofold: 1. To encourage Buyers to find an agent who will competently represent them in the purchase of a home and 2. To be prepared to dump any agent who demonstrates anything but number 1. I know this article will ruffle some feathers, but who will it ruffle? There is an inherent flaw to the current traditional means of selling a home. The flaw is that the listing agent and the selling agent do not get paid unless the home sells! So the worst thing about the current home selling method is also the best thing about the current home selling system – it gets people into homes because everyone wants it to happen! The seller wants to take the money and move on. The Buyer wants a new home.

The listing agent and the buyer’s agent (sometimes they are one and the same) desire to be paid for their efforts and also want the seller to accomplish his stated goal and the buyer to get into the home. The above is the ideal scene, of course. But here we are on planet earth, the site of Murphy’s Law – simply stated “Anything that can go wrong will go wrong.” After 23 years of real estate sales and lending, I’ve learned just that. Especially overseeing an office of 16 loan agents, 7 real estate agents and all the necessary support staff during the heydays of the market in Northern California. For 50 to 70 hours a week, my job was to train these folks and then “oversee” their transactions. “Oversee” really meant MAKE SURE THEY GOT DONE and a lot of the job was simply cleaning up the messes that really were the result of a lack of experience or honest desire to help.

I always preached to my agents that there were really no “problems” in a real estate or loan transaction, just items that had to be checked off a list. I assure you though, that if an agent did not have an honest desire to push through the transaction and well communicate whatever necessary to all involved parties, well, here came the problem(s)! One thing that I know with certainty from all these years of being in the business, is that when someone came to me to help them buy a home, they wanted to buy a home – NOW. When someone came to me to refinance a loan, they wanted to refinance their loan – NOW. So the job really became finding the easiest, quickest path to that stated target on their behalf. True professionals accomplish just that. The truth is “professional” in a lot of circumstances has nothing to do with years of experience.

It is really more of a viewpoint to get the thing done in spite of barriers that will come up. You want to avoid Buyer’s agents who are adversarial in their approach to the purchase. It is not rock ‘em sock ‘em robots. You want to buy and the seller wants to sell. How do you get a meeting of the minds in a boxing match? This comes in varying degrees too. How about the real estate agent who counsels you to back out of a contract because the seller won’t pay for the home warranty? OK, maybe that’s an exaggeration but you get the point. Avoid agents who are alarmists. To them everything is a problem and a big deal. Here is an example of an alarmist: You see some mold in a home you are viewing and the agent makes it out to be a huge big deal. Maybe it is maybe it isn’t. As I mention above, it’s just something to be checked off a list. The alarmist will try to stop your progress towards this purchase because of the mold.

A true professional would move the purchase along and do the reports necessary to have the appropriate professional, who knows mold, tell you it’s a problem or not. I could go on and on along these lines to include agents who will not communicate or answer your questions, those who are always late or no-show’s for appointments, agents who reschedule everything, those that are negative, have steered you wrong, those that continually bad-mouth others, are opinionated, agents who are just out for the money and not to honestly help, etc. People innately know professionalism when they see it.

You should demand that for yourself in the most expensive purchase you will make in your life.

Forest Tardibuono- the Guy in the White Hat – is a CA DRE Broker with more than 23 years of experience in real estate and lending. His phone number is (707) 523-2099. Email is Forest@sunpacmortgage.com. See website @ www.sunpacmortgage.com.

IS IT A BUYER’S MARKET OR A SELLER’S MARKET ARE YOU CONFUSED?

What is a Buyer’s Market?  It’s a market were the buyer is in charge.  There are more homes on the market than there are buyers.  Buyer’s Rule!

What is a Seller’s Market?  This is a market where there are more buyers than sellers and the offers are plenty, driving the price of the home up.  Sellers Rule!

For the last couple of years it had been a buyer’s market.  You couldn’t sell a home if your life depended on it.  Prices wre too high, no one could afford them and the word on the street was that home prices go were going down, down, down.  All of this was true!

The market has changed a bit.  The seller is more in charge IF the house is priced correctly.  There are multiple bids driving prices up.  Sales whent down after Christmas through January and February, but are going up again.  October 2008 454 homes sold, November 366, December 413, January 2009 338 sold, February 315 and on the move again in March 364 sold.  Tradititionally Spring and Summer are the selling months.

If you want to sell and are able to, now is the time.  If you are unable to because you owe more than you can sell for, then you might find out about short sales.  A short sale is when your lender agrees that you can sell the house for less than is owed to them.  The Federal Government has been pushing the lenders to accept short sales – but the lnders are not too fast in responding to this.  There are short sales on the market and a small percentage of them do sell.

If you are a buyer, buy now.  Correctly priced houses are flying off the market with multiple offers being made.

Forest Tardibuono is a CA DRE Broker with over 20 years experience in real estate and lending.  His number is (707) 523-2099.  See website @ sunpacmortgage.com.

4 Ways to Buy a Home

 Newly Built Home – There are still newly built homes on the market.  In the Sunday section of the paper these are highlighted with a map.  Sometimes there is special financing available through the builder.

  1. Resale Home – These are homes for resale by the owner.  Sometimes the owner still lives in them and sometimes they are empty.  Financing is available through the Federal Housing Administration (FHA), Fannie Mae and Freddie Mac.  All three agencies require proof of income, a down payment and will examine your credit.  30 year fixed mortgages are available.
  2. Short Sale – These are homes for sale that require homeowner/seller approval and lender approval.  The seller owes more than the property is now worth.  As an example, the mortgage owed is for $400,000, but the house is only worth $250,000 right now.  The seller and their mortgage holder have to approve the contract for sale.  The loan you get will be a typical FHA, Fannie Mae or Freddie Mac 30 year fixed.  But you might have to wait – even up to 6 months – for the mortgage holder to approve a lesser pay-off.
  3. Foreclosure – For some reason a lot of people think buying a foreclosure requires a strange and different loan.  It does not.  BUT FHA, Fannie Mae and Freddie Mac do require an appraisal.  The appraisal cannot say the house is an extreme “fixer” and needs lots of lots of work, or you won’t get a typical 30 year fixed rate loan. If the foreclosure you are looking to buy is tired and dirty – which a lot of them are – you generally can get a typical loan.  If the property is an extreme “fixer” and it is obvious, the appraiser will note this and the lender will not approve your loan.  Other than that, buying a foreclosure is like buying a regular resale.

Forest Tardibuono is a CA DRE Broker with over 20 years experience in real estate and lending.  His number is (707) 523-2099.  See website at: sunpacmortgage.com.

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