MLO | Mortgage, Home Buying & Selling Insights

No More JUMBO Loans!?!? Are Luxury Homes In Trouble?

April 09, 2020 Addy Nett Season 1 Episode 5
MLO | Mortgage, Home Buying & Selling Insights
No More JUMBO Loans!?!? Are Luxury Homes In Trouble?
Chapters
MLO | Mortgage, Home Buying & Selling Insights
No More JUMBO Loans!?!? Are Luxury Homes In Trouble?
Apr 09, 2020 Season 1 Episode 5
Addy Nett

Jumbo Loans. What are they? 
So any house that seems expensive. Does that mean it's a jumbo loan? Why're lenders and banks no longer doing that? 
Do we have any options? 
Is the luxury division completely toasted? 

LIVE recorded stream with Ed Schwartz from Symmetry Lending. Giving us some insight on how we can continue to close Real Estate Transactions that exceed the conforming loan limits.

Show Notes Transcript

Jumbo Loans. What are they? 
So any house that seems expensive. Does that mean it's a jumbo loan? Why're lenders and banks no longer doing that? 
Do we have any options? 
Is the luxury division completely toasted? 

LIVE recorded stream with Ed Schwartz from Symmetry Lending. Giving us some insight on how we can continue to close Real Estate Transactions that exceed the conforming loan limits.

Addy Nett:   0:00
Jumbo. What is that? So any house that seems expensive? Does that mean it's a jumbo loan? Why're lenders and banks no longer doing that? Do we have any options? Is the luxury division completely toasted here today of Head Schwartz? A fan favorite to all in the region breaking down some different options. We might have to still close on luxury properties. My name is Addy. Net. This is Elko Way are all trying to do this from home. Right at I mean Oh, my gosh. I'm even trying to figure out, like, all this technology and whatnot, I'm supposed to be the one at it. So thanks for ah, bearing with us. And hey, welcome to the show, Everyone. We have Ed Schwarz, a fan favorite out there, Ed. Thanks for Thanks for joining us on the M l o show today.

Ed Schwartz:   1:04
My pleasure. Questions.

Addy Nett:   1:07
Then, add Man, the big topic of conversation is jumbo loans. Like, are they done? Are the out there who still doing them? And I'm gonna push back a lot today because we've got alternative ways to get transactions done. Guys on. And I'll do my best to kind of translate into a lot of that. Just general population translation. So, at what do you What do you see going out there with jumbo loans? And how do you guys present an alternative solution for everyone?

Ed Schwartz:   1:39
Well, first of all, who I am is I I have often on for about the last 20 years have worked for different home equity lenders. So the lender that I work for now a symmetry lending. Yeah. And, uh, the way that we have been set up for the last two or three years is we do home equity lending behind first mortgage this. But the crazy thing that has happened in the last few weeks is, for the most part, jumble lending has going away. Okay, So as far as I know, there's not too many lenders out there that are still doing jumbo lending. The ones that are left are making it so tough and restrictive that 99% of the population cannot get loan through. Certainly not in a 45 or 60 day window.

Addy Nett:   2:30
Right? And add just so that everyone out there who is not in the industry and watching and tuning in Today a jumbo loan is a loan that exceeds the, uh, conforming limit within your county or state. So here where we are Portland, that's 5 10 400 amount borrowed. Not the sales price, but the amount borrowed.

Ed Schwartz:   2:50
Exactly. Exactly. So you know, certainly an organ in Southwest Washington. That leaves a big, big hole. There's a lot of homes that are, you know, and from one point to 1.4 million all the way down to 600,000 no longer have homes.

Addy Nett:   3:13
Yeah, I mean, especially that in Portland area. I couldn't imagine Seattle, San Francisco, but us being a little more affordable in Portland. Right? So even that, like low 600 doesn't get you a whole lot of house and say you've got 10% down on a payment. You are in jumbo land and right?

Ed Schwartz:   3:34
Exactly. Exactly. And that's where we come in. Is we step up, provide the difference between the $510,000 limit up to whatever your borrower needs. So assuming they can come up with 10% down, we can step in all the way up to on our side, up to 1/2 a 1,000,000.

Addy Nett:   3:54
Okay, Okay. So just to make make this once again educational. If everyone there would be two loans in that situation, right?

Ed Schwartz:   4:04
Correct. Okay. First at 510,000? Which we would provide, which would go all the way up to

Addy Nett:   4:15
Okay. Okay, that's that's really good to know. And that would be referred to as well, like a second. Piggyback. What? What's the most common terminology used these days? Said

Ed Schwartz:   4:26
I do hear biggie back quite a bit. Okay, It's, uh, the second piggybacks onto the first, and it allows you to get You're

Addy Nett:   4:37
okay. And we got to make it clear for everyone to just compliant. Lee. This is all educational. So it's There's certain credit requirements and different rules and guidelines per your loan officers. So if you were shopping in that say, 600 or higher range and you have that it leads to 10% down payment. It's worth connecting with your loan officer, and your loan officer works with ad in finding alternative ways to finance the home, even though you might have thought you were out of the market because quote jumbo loans are done, anything to add to the way I just said that they read

Ed Schwartz:   5:17
No, I think you're spot on. Okay, there's I mean, there's that. There's a number off. There's a number of reasons why people used us. Jumble lenders have been very, very restrictive for the last couple of years. Had issues with three amount of reserves you have to have, sometimes requiring that you have ah, you know, a year's worth of, you know, if your monthly house payment is 5000 that you would have have to have 12 months of that in terms of the way that they look at tax returns in terms of the way they, uh, look at, um, a number of ways that they underwrite. So we've always stepped in because of those reasons, But now we're stepping up just because Jumbo's don't exist at all

Addy Nett:   6:06
Bright red. And I think that's a really important thing to know guys because, um, if you were in that price range and you were just stepping out and saying, Hey, there's there's no way I could do this right now because of what you heard. There are some options out there, So once again, you know there's product specific guidelines per the loan officer in the lender that you're working with, but it's worth a call and it's worth checking out to see it. This is an alternative option now that I'm gonna bring this up because, you know, we start using the word second mortgage or piggyback and with everything that's going on with four Barrens and late payments. Ah, potential foreclosure market. So do any of these things kind of put us back into those things that a lot of people are concerned about? Or are there new kind of restrictions and guidelines that are preventing us from some of the bad decisions we made in the industry over a decade ago?

Ed Schwartz:   7:01
Well, you know, it's interesting, I can tell you that myself. And then there's a handful of companies have been a little bit more conservative. Historically, the loans that got the second mortgages the first mortgages that got everybody in trouble were the high, higher lower down payment loans alone for people had almost no skin in the game. Our particular company around most of the country limits the lending to where people do need to come in with 10% down, uh, and so consequently the loans that we still are performing incredibly well, because people have skin in the game, don't do whatever they can to hold on to their lone their homes, their loans s o we have not had to have, uh, pull backs. And the way that we underwrite in the way that we look at loans at this point, having that there are a handful of second mortgage lenders that have gone out of business in the last few weeks have left the marketplace. But, uh, us and and a handful of others are that have held firm, too, requiring a little bit more down are doing well. And there hasn't been a whole lot of fullback at this point.

Addy Nett:   8:25
Yeah, that, you know, you mentioned that zero down our down payment assistance programs. You're seeing a lot of those wash away on and be very challenging to even find a wonder that's doing those these days similar to the jumbo. I call him like the book end products. Right. So you're seeing those definitely dissolve as the market becomes a little more scarce and a little more tight on the guidelines. What states exactly do you cover again? And I'm just curious if I outside of Oregon up in Seattle, up in San Francisco. Could you give us some insight of what you're experiencing in those markets compared to Portland right now,

Ed Schwartz:   9:04
Right. So, uh, we are mostly in, I think probably 35 40 states. I don't know the exact number right off. And sure, I personally just cover a couple of states. I cover organ Southwest Washington. I am very familiar with Washington, California, Idaho, Montana. And, um So you know, what I'm seeing in those states is the same thing that we're seeing here, but probably to a greater degree in California, where it seems like a majority of loans are in the 1,000,000 million and 1/2 dollar range for Ah, a lot of areas. Um, we've become even. We've become very popular. Let me put it that way in the last few weeks.

Addy Nett:   9:52
Yeah. Yeah, it's It's definitely interesting times. And I really am glad we took a little bit of time here to just bring it to the show, Ed. And, you know, on a personal note, I owe a lot of people hold you in high regard. You You've been in the business for a very long time. I won't ask you how many years, but, um, everybody loves you when your name comes up. So it's super excited to get you on here and encourage everybody. Hey, reach out to your Wender that you're working with. Reach out to your real estate agent. Um, And if your plan this year or next year was to buy a house and potentially, um, you stopped looking because they was a jumbo market for you. There are some things to look at, and there's some alternative, Ah, products out there, especially ones that Ed's providing

Ed Schwartz:   10:41
well, yeah, and the one thing that I would say is right now, my best guesstimate is that the homes that are selling under 500,000 Fanny Mace Still, I don't think Fannie Mae has really changed their rules a whole lot on those. But with the jumbo financing washing away, I think there's gonna be some great opportunities for people who have been looking for their dream homes in the higher value amounts. So if I were looking to trade up now would be a great time. I think there's gonna be, ah, a lot more availability on the market, but we shall see

Addy Nett:   11:25
So what I'm hearing you say it just like bring that into summary is okay. So if less people are qualifying for, say that, you know, higher to your level home at potentially that transit a little bit more of a buyer's market for that quadrant of a sales price. Meaning someone could upgrade to your point. Just pace it out of competition and eligibility to purchase the home.

Ed Schwartz:   11:49
Don't walk away right now,

Addy Nett:   11:51
so yeah, I know. We get that all the time, too, with, like, uh, people ask me. Well, what What should I offer under asking or above? And I think the tough thing is, we're just in a market right now that we're all adopting and we're learning each day of where it's going. And one highlight on the media could change the temperature not only of the buyer, but of the cellar. You see in that out there, too.

Ed Schwartz:   12:15
You know, Anderson, I, uh I being on the wholesale side, I I tend not to watch with that granular bubble level of detail. Um, but yeah, I You know, the one thing that I do know having been around as long as I have, is any time that there's changes in the marketplace, there are opportunities. Yeah, And you know, Portland's been kind of a a rough market, too. Sometimes you find the perfect home, and you're bidding against maybe three or four people. And, um, now might be a really great opportunity. Find your dream home. If you're If you're out there,

Addy Nett:   13:00
you could make the move. All right, guys. Well, at I want to thank you again for taking the time. It was a pleasure to have you on and, um, much appreciated. And I hope you have a good rest of your day

Ed Schwartz:   13:12
back at your stay safe.