Difficult Deals

A buyer’s loan for a condominium property was in jeopardy because of difficulties with their HOA (Home Owner’s Association) insurance. The renewal of their HOA master insurance, the required fire insurance that replaces the complex in case of fire, had been denied. Every lender requires a valid master insurance policy in place that doesn’t expire for at least three to six months from the time escrow closes on the purchase.

The existing policy had been extended from its original expiration date to two weeks after my buyer’s purchase was supposed to close. But the lender was requiring a policy that was good for at least three months after closing. The HOA had waited until the last possible day before settling on a new insurer and policy, which meant I had to extend the loan transaction beyond our original closing date by over two weeks.

We had locked the interest rate when the loan was originally in contract and I had locked it with a one-week cushion, just in case something unforeseen came up that would cause the transaction to not close on time. I typically do this as long as it doesn’t impact the cost to close for the borrower. But in this case, we needed two more weeks, requiring us to extend the lock beyond its original expiration date.

At the time of the lock, interest rates were down from where they were when I needed to extend the lock. In this situation, the lender will usually require the borrower to pay an additional fee in points to extend the rate lock period. This issue was not my borrower’s fault so I worked with the lender to get the lock extended for one week for free, based on my relationship with the lender. Then I worked on negotiating with the seller’s agent to have the seller pay for an additional five days of the lock extension since this was an issue with his property and the HOA. I was able to get the seller’s agent and the buyer’s agent to split the cost to extend for the remaining three days or so with me and we all split the final cost to extend the lock between the three of us.

Another complication was that we had removed our loan contingency prior to learning of the insurance issue with the HOA. But I was able to work with the seller’s agent to get her to work with the HOA to help them find a new insurer and to allow us to extend the escrow period with no consequences for my buyer.

At the end of the day, everyone was happy! My buyer not only got to close on her new property but also didn’t incur any additional costs due to having to extend the escrow period and the rate lock. And she kept her interest rate in a rising rate environment along with the original terms I had negotiated on her behalf at the very beginning of the transaction.

An immigrant couple who both work in low-income jobs came to me for help buying a second home. Both of the borrowers work in the restaurant/food service industry, and their hours and income were somewhat variable. Only one of them had a social security number, so we could only use one of the borrower’s names on the loan application.

They owned a single family residence property in San Francisco that they purchased years ago and were occupying as their primary residence. The property had appreciated nicely over the years and I helped them take cash out to put them in position to purchase another primary residence outside of the Bay Area. This allowed them to rent out the San Francisco property and move to a more affordable part of the country. The rent on the San Francisco property was enough to create positive cash flow for them on that property and the $100K cash they took out on the equity of that property allowed them to move to Texas and buy a new home for cash.

The borrower without a social security number has since gotten his green card and has a social security number now.  I am working with them to purchase another home in Texas where they are making the same income as in San Francisco but where the cost of housing is dramatically less. They will rent out the home they purchased in Texas for cash and it will also create a nice cash flow vehicle for them. They can now qualify for a purchase of a home in Texas that is twice the cost of the one they currently own, because we can use the second borrower’s income now and they own two properties that cash flow positive.

Part of the way I am able to get the income from their jobs to work for qualifying purposes is that I have been working with their employers to get formal, written verifications of employment that explicitly state that both borrowers are full-time employees despite their slightly variable hours showing on their paystubs, and I don’t submit their paystubs to the lender.

A high net worth person who wanted to refinance a home in San Diego came to me because he was being denied by lenders. He had bought his home with cash, and had income and equity, but his situation didn’t fit into any of the narrow categories that underwriters prefer.

The borrower was a business consultant and author with over five published books who is constantly traveling internationally for business. He had been living primarily overseas for the past 10 years but did purchase a home in the San Diego area for cash late last year with a plan to move back to the US. He didn’t even really need the mortgage, but his financial advisor recommended that he take advantage of the low rate environment from last year by refinancing a property and investing it in other ways.

The borrower, who was worth many millions of dollars, had bought a $2 Million dollar San Diego property for cash. He wanted only $1 million back to reinvest elsewhere. He was living overseas and had yet to move back to the subject property, which is the only property he owns. He is self-employed and files his taxes as such.

The lenders on this type of non-conforming Jumbo loan had tried their best to kill this loan. I was able to work through many underwriting issues, despite the borrower getting very frustrated throughout the process. It took us longer than expected to close but we finally did close at a great rate and we met the borrower’s goals.

This was a very complicated deal that fits into the first tenet in mortgage lending where mortgage lending makes zero common sense. This borrower was referred to me by a high-end financial planner that I have a 10-year relationship with. I had to put my loan whisperer skills to the test on this one and it was a crucial one to close since the financial planner who referred this borrower to me has the utmost confidence in my mortgage skills and letting him and his client down was not an option for me!

I recently had the privilege of helping a couple, first-time home buyers, purchase a property where one of those three lenders was not going to make the loan at the 11th hour due to a very minor guideline that one of the borrowers was not able to clear.

These buyers had gotten into a contract with a FinTech company that purchases real estate for cash and then sells the property to the home buyer who agrees to the FinTech company’s onerous requirements. One of these requirements is that the buyer rent back the property until such time as the buyer can secure their financing and purchase the property from the FinTech company.

The looming disaster consisted of this:

• There is a finite amount of time in which the buyer must close on the purchase and each day they go over it was costing the buyer $500/day in increasing rent payments.
• Eventually, if the buyer cannot perform, the buyer would lose their deposit and still have to pay for the closing costs the FinTech company incurred when making the all-cash purchase.
• Not to mention that they would lose the house and have to move out of it!

To make matters worse, the couple was pregnant and due within a few months of the expected closing date.

Luckily they contacted me because they were friends of one of my networking partners, and I was able to get their loan closed in 14 days from the time I took the loan application.

See Fintech: Worst Escrow Experience of My Career for more about that!

A Brazilian man, working in tech in the U.S., whose funds for the down payment were held overseas and who had limited U.S. credit, came to me for a loan to purchase a condominium.

As a foreign national temporarily working here but not a U.S. citizen, he had only a few domestic accounts listed on his credit report. Even though he did not have an H1B visa or a Green Card, I was able to get him into a loan to help him purchase his new primary residence in Orange County.

A retail store owner who is also a homeowner in Kensington, came to me looking to refinance. His home loan had a balloon payment that was coming due. The stakes were high: he needed to refinance soon or he could potentially lose his home. The current lender was poised to repossess.

His tax returns did not show the net income required to qualify for a conventional loan.

Using a CPA-certified profit-and-loss statement for the last two years, I was able to get him refinanced into a more stable loan at a lower interest rate. Thus, this business owner, and his wife and kids, were able to keep their beloved family home.

A real estate investor had started to do a renovation on a rental property, a condominium. He had run out of funds when unforeseen costs arose, and he came to me looking for a solution for the project that was in progress.

He had a fair amount of equity in the property, and so, I was able to get him a private-investor loan that allowed him to complete the project, in a situation where conventional lenders would not provide a loan for him.

After the project was completed, we were able to refinance that loan into a conventional loan, thus reducing the interest rate dramatically from a private-investor loan, and getting him into a more stable fixed-rate product.