Save a Deal & I Don’t Get Paid – LOL!

Late last night, I received an urgent call from a listing agent. She had an offer in hand, but the buyer wanted a 90-day escrow. The buyer earned enough money to qualify for the home, but there was one complication: she is currently on maternity leave and was not scheduled to return to work until late November. The lender working with the buyer was having difficulty qualifying her because she would not be back at work before her first mortgage payment became due.
Here is where understanding the complete guideline can make all the difference.

When a borrower is on a documented temporary leave, such as maternity or parental leave, and will return to work by the first mortgage payment date, the lender can generally use the borrower’s regular qualifying employment income. When the borrower will not return to work by the first payment date, the lender must generally start with the lesser of:

The borrower’s temporary-leave income, such as disability or paid-leave benefits, or the borrower’s regular employment income.

However, another part of the guideline can sometimes save the transaction. The lender may be able to use the borrower's available liquid reserves after closing to supplement the temporary-leave income until the borrower returns to work.

Here is a simple example:
The borrower's regular employment income is $8,000 per month.
While on maternity leave, she receives $4,000 per month in temporary disability or paid-leave income.
She will begin receiving her regular employment income two months after the first mortgage payment date.
The difference between her regular income and her temporary leave income is $4,000 per month.
If she has at least $8,000 in eligible liquid reserves remaining after closing, that amount could potentially provide a $4,000 monthly income supplement for two months.
The calculation would look like this:
$8,000 in available liquid reserves divided by two months equals a $4,000 monthly supplement. That $4,000 supplement is added to the $4,000 in temporary-leave income, allowing the lender to potentially qualify her based on the full $8,000 in monthly income.
Boom! A loan that initially appeared not to work may now be possible. The borrower must also document the amount and duration of the temporary leave income, confirm her intention to return to work, and provide employer documentation confirming the expected return date.

Here is the best part of this story: I did not get the loan. Once I explained the guideline, the buyer’s agent decided to give her lender another opportunity to review and restructure the file. The lender will now review the complete guidelines and should qualify the buyer. What matters is that this may never have happened had the listing agent not called me. Instead of automatically rejecting an offer because the financing looked questionable, the listing agent picked up the phone, asked questions and tried to find a solution.

That is what great agents do. And yes, I know guidelines too!

I am not just a big old body with no brains. I certainly did not make it this long in the mortgage business because I was pretty! I made it through hard work, experience, and knowing how to structure difficult transactions. Knowing the guidelines allows me to see the full picture, identify possible solutions, and help transactions move more smoothly. That also makes the agents involved look better because properly structured files have a much better chance of flowing through underwriting and closing successfully.

When an offer or preapproval does not seem to make sense, do not immediately give up on it… CALL ME.

Sometimes one phone call, the right calculation, and a complete understanding of the guidelines can save the entire transaction.

Interest Rates
Rates are a little better today, after a nasty day yesterday. The CPI came in today lower than expected, and that helped push the market in the right direction. Rates are right where they were last Friday, and that was nothing to write home about, but at least I gave you a little info.

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:

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,