Escrow and Lending Pitfalls: What Every Real Estate Agent Needs to Watch Out For

Tomorrow at 12:00 noon, we're hosting a Lunch and Learn with Escrow Advantage in the conference center at our office building at 25129 The Old Road, Suite 305 in Santa Clarita. 

The topic:
Escrow and Lending Pitfalls: What Every Real Estate Agent Needs to Watch Out For
There are plenty of lending mistakes that can jeopardize a transaction, but here is one real-life example as a teaser.
A loan officer called me last week to cross-qualify a buyer he had supposedly "pre-approved." I started asking some basic questions.
"What does the buyer earn?"
"$120,000 per year."
"Is he a first-time buyer?"
"No. He owns two rental properties."
"Great. We will need the tax returns to show he has been earning rental income"
"We aren't using the tax returns. We're using his W-2 income."
"Okay, then how are you offsetting the mortgage payments on the two rental properties?"
"We're going to use bank statements."
I asked whether this was some new loan program. He said no, but his wholesale representative told him it would be acceptable.
For those who may not know, a wholesale representative works for the lender and helps loan officers with programs and scenarios. However, the representative had not reviewed the borrower’s file, income documents, tax returns, liabilities, or bank statements. The loan officer was relying on a casual conversation rather than an actual review of the loan.
I asked the loan officer to send me the income documents and the email confirming the representative’s guidance. I still have not received anything.
Had the listing agent not required the buyer to be cross-qualified, the seller could have taken the property off the market last week, only to have the loan fall apart a week or two later.
Could the financing possibly be figured out? Maybe. But with only 10% down, I am not aware of a lender that would simply allow us to use the W-2 income, ignore the tax returns, and use bank statements only to offset the mortgages on the rental properties.
Based on the information provided, I would advise the seller not to accept this offer until the financing is properly verified.
The biggest concern was not just the questionable guideline. It was that the loan officer needed guidance from a wholesale representative who had never reviewed the file and may or may not have fully understood the scenario.
There are unusual loan programs and exceptions out there. When something sounds unusual, however, it needs to be verified directly with the lender before the seller accepts the offer, not after the property has been taken off the market.
This is just one of the many lending and escrow pitfalls we will discuss tomorrow. Join us at noon and learn what questions agents should be asking before a transaction is put at risk.
Please let me know if you can make it so we get enough food.   

Interest Rates
This is where we are struggling! Rates are up even though we saw good CPI and PPI numbers last week. Oil prices are rising again, and there is fear of inflation when the June numbers come out. In simple terms, they are not ready to drop rates as there is still a lot of concern over inflation due to the war. 

Loan Programs Snapshot

• Government loans (FHA/VA/USDA): in the 5s –
• Conventional (≤ $832,750): low 6s
• High-balance: mid to high 6s
• Jumbo: Mid 6s
• Bridge Loans  7.75-7.99

Additional options:

• Bank statement loans (10% down+)
• P&L loans (20% down, no bank statements)
• 0% down options (620+ score)
• DSCR loans (15% down)
• Buydowns Available (3/2/1, 2/1, 1/0)
• Private Money loans – Hard Money  
• Construction Loans
• 203K loans
• Commercial Loans
• Fix and Flip Loans  

Rates subject to change without notice. 

Condo Update
Good news:

• Heather Ridge – Off the naughty list and back in business! New Insurance policy and a new life!    

Bad news:

• Del Prado  – Newhall – Critical Repairs – Deferred maintenance
• Palisades -  25730 Armstrong Stevenson Ranch CA 91381 – Critical repairs   – Deferred maintenance  – reserves  –  Insurance!  Yes, they hit just about every bad thing you can!  LOL! 
• The Legends at Cascades  – 16702 Niklaus Drive Sylmar  – Insurance deductible too high!  
• Tres Robles 3  – Critical repairs – deferred maintenance  
• Vera Townhomes – 43334 32nd Street West Lancaster  – Reserves are too low!  

We love your Non-Warrantable Condo loans!!
Need help checking a condo? Call me, and we can look it up in real time.
Also:
Full California "naughty list" available here:

https://mikemeena.com/non-warrantable-condos/

Let's Connect

If you or your clients, friends, or family need guidance, I'm here.

📞 661-291-2222 (Direct)

📞 661-714-6258 (Cell)

📞 661-260-2970 ext. 2222 (Office)

📧 Mike@AugustaFinancial.com

Sincerely,