What am I missing??? Help!! (Long) - Posted by Karen

Posted by tommy_FL on November 13, 2000 at 08:36:50:


My last purchase was a duplex, price: 125K. I put 2k as earnest deposit on purchase contract. My mortgage broker did a 1st mortgage for 75k, a 2nd for 25k, a 3rd for 24k. I got 1.5k back at closing. This is real and it’s the 2nd deal that I’ve done with same mortgage co. And these properties were NOO…I always thought that some mortgage brokers can do wonders. Mine has been in the business for 15 years. In my case, I have a full time job, credit score in the 600 and properties were appraised 10-15k “as is” above the purchase price. I never had any lender asking me for proof of funds…etc.

What am I missing??? Help!! (Long) - Posted by Karen

Posted by Karen on November 13, 2000 at 01:38:51:

Ok I have a question for any and all investors.
I have read everything I can get my hands on about creative financing. No money down and such. I have also been a mortgage/real estate broker for the last 5 years.
Question is: How is anyone out there doing no money down deals when lender financing is involved, I’ve read about giving a note on another property for downpayment, deferring the downpaying, borrower the downpayment from real estate broker, Bringing in a partner with the downpayment, etc… etc…, but I have searched far and wide, and unless your credit is perfect 640+ scores, I know of no lender that will allow 100% CLTV, even if they are only loaning you 65% LTV, CLTV is CLTV to them. The same thing goes for getting cash back at closing, I understand credits for rents, deposits, etc., but if the lender requires 5-10% down payment you must not only show up with Certified Funds in most cases it must be seasoned funds(60 Days).
Could anyone please post a success story telling the small details that make these deals work.

I have wrote many of creative offers for my clients, seller accepts, then lenders decline because buyer has no CASH into deal. Please Help!!

Also as to the Lease/Option all my lenders treat these as purchases no matter how long they have been into effect. How are those of you doing these getting them refinanced?

Thank you for your patience with this post.


Re: What am I missing??? Help!! (Long) - Posted by Ed Garcia

Posted by Ed Garcia on November 13, 2000 at 10:23:27:


The first thing I have to say is, it sounds to me like you need some new lenders. Also I think it important for you to know that down payment doesn’t always have to be in the form of cash. It can be an exchange and can be done out of escrow. There are many lenders who don’t verify down payment if the LTV is 75% or less. One of these lenders is Washington Mutual. They have what they call a NO Income, No Asset Loan. Which means that if you have a good borrower they will not even verify the down payment and where it came from. I think the problem you’re having is with the less than credit worthy borrowers. You mention that a 640+ credit score as being perfect and that you seem to be having problems with borrowers with a less score.

Karen, the first thing you have to realize is that when you give a lender a problem child, the lender is going to scrutinize the deal. As a lender, once I see a deal with a credit problem, I then have a tendency to look for other aspects of the deal to hang my hat on. The obvious is EQUITY, or on a purchase, CASH DOWN. I think we both know that today, the lending community is driven by credit scores. There are many Sub-prime lenders that will do the deals that you’ve said you’re having problems doing; you’re just going to have to do your homework to find them. In most cases they want to see at least 5% of the borrowers money in the deal, but once again, it depends on the deal and it’s circumstances. To do a deal at 95% CLTV, NOO, where the borrower is not a quality borrower, is not a bad deal.

However when you mention a problem in financing a lease option, I recently have done a refi on a lease option for a participant of this board named JPiper. Mr. Piper had lease optioned one of his properties and wanted to be taken out. His buyer hardly had any credit, as a matter of fact, we had to send a searching party to find and make up credit on the guy. You know, water bill, gas bill, electric bill, etc.

Karen, I realize that some deals are harder then others. But you mention that you’ve been brokering for 5 years. I would like to suggest for you to spend a little time looking for the lenders that are out there, and begin to do business with them. I have some brokers coming to my workshop who are having trouble finding hard money. How can you call yourself a broker and not be able to provide hard money to your customers. I realize that some area’s are more resourceful than others. I know that if you live in a small town, it can be a difficult task to find hard money.

Today I’d like to introduce you to the lender that you’re having trouble finding, ME. When you have a problem with your deal, you can call me at (909) 944-0199.
I’m not going to be able to save all of your deals, but I’m sure I’ll be helpful to you.

Ed Garcia