10 years of mortgage news: ADUs and IRA home loans are hot topics

Contributing columnist Jeff Lazerson reflects on 10 years of writing about mortgages.

There is nothing like writing a mortgage column for a big city newspaper. Can you believe it’s been 10 years?

Besides my weekly anxiety about whether my editors (and you) will like what I offer up, I get plenty of feedback from readers about my columns. It’s typically something like “Thank you. I didn’t have any idea about this.” Or it’s “You have your head up your -ss. You don’t know what you are talking about.” I’m grateful I receive more of the former comments than the latter. But I do get both.

Below, I share my 10 biggest takeaways since starting this column in August 2011.

1) Fannie Mae developed an automated appraisal underwriting system called Collateral Underwriter. It rolled out in 2015, and I think it’s an exceptional invention.

The automated system (along with Freddie Mac’s Loan Collateral Advisor)  speeds up the appraised value decision-making and saves borrowers roughly $600 in appraisal fees, should a property inspection waiver be issued. It’s also an excellent property value and quality checker on appraisals done by humans.

My two cents: Why can’t Fannie and Freddie come up with an automated process to waive a borrower’s income documentation? The data giants can easily and accurately peg most people’s salaries. The agencies could combine the proximate income with an equity/down payment metric. The result would be a lower-income accuracy bar for more equity-rich borrowers. For the love of peace, this could speed up the loan approval process. Nobody is walking away from that property with say 30% down payment.

2)  An ah-ha moment for me was learning what one could do with IRA funds. Yes, you can buy rentals with IRA funds for the down payment. There are lenders willing to make mortgages to your IRA and not you directly. Many readers told me they implemented this financing mechanism because they didn’t have enough cash outside of their retirement accounts.

3) Sometimes mortgage industry folks, government officials and even consumers lie to me. A senior executive from a big mortgage lender wanted publicity for his company regarding a specific loan program. He explained his firm managed to cut an exclusive deal with Fannie and Freddie that nobody else got.  Neither Fan nor Fred would confirm the deal. The story never ran.

My newspaper bosses have always told me, “If your mother says she loves you, check it out.”

4) The 2020 granny flat or accessory dwelling unit law was probably the most well-received series of columns I’ve written. (Those columns published in December 2019). Briefly stated, the California state law cut a bunch of red tape out of the process for folks to add living spaces to their properties. It is one very good answer to offset the housing shortage.

The law also offers property owners a way to facilitate shelter more easily for their family or provide rent as a supplemental income. To this day, I receive calls from folks wanting to learn more about the ADU building process.

5) I love tips. I’ve written many a column thanks to folks who tipped me to a story. The best one I ever received was from an industry peer about one lender having nearly a 10-year monopoly on cooperative mortgage lending at Laguna Woods Village. Even with all the noise made from the Laguna Woods co-op owners, there is still just one co-op lender in Laguna Woods today.

6) In 2011, in the post-Great Recession days, the mortgage broker market share was under 5% of home and refinance loans. (Full disclosure: I am a mortgage broker.) Brokers were largely blamed for the mortgage crisis. Can you say “Scarlet letter?”

According to a consumer survey released jointly last week by the Consumer Financial Protection Bureau and the Federal Housing Finance Agency, 46% of consumers applied for home purchases through mortgage brokers in 2019. And 38% applied with brokers when refinancing. Talk about coming back from the dead!

7) Nothing makes a column better than subject matter experts. I have several names on my Rolodexes. (Yes, Mr. Old School has two sitting on his desk).

Dave Stevens, a former FHA commissioner and retired Mortgage Brokers Association president, is the bionic brain of subject matter experts. He understands issues and knows policy like nobody else. Articulate and thoughtful he is.

Real estate attorney Mike Hensley, along with CPAs Jeff Hipshman, Warren Hennagin and Marcelo Sroka, have been great resources in educating me and you. And generous they are. Every week readers call me or email me with column-related thorny questions. Countless questions have been answered by these fine folks, free of charge.

Nobody ever thinks much about property title issues until there is a problem. Glenn Awerkamp, Lawyers Title Insurance vice president, has been quoted in these columns for years. And he was the walking encyclopedia of information for readers — always digging in to solve their complex title issues. I’m sad to say Awerkamp died suddenly and unexpectedly last weekend.

8) Being on the company side of media relations can be tricky. The bravest, toughest, most professional press person I’ve ever dealt with is Tom Goyda, Wells Fargo Bank’s senior vice president of media relations. Perhaps more than any other banker, I have asked Tom a lot of tough questions over the years about a variety of Wells Fargo practices and customer concerns. He is a pro.

Goyda has always been as fast to research and respond to unpleasantries when I’ve queried Wells’ officials on hot topics. He is always calm as a cucumber.

9) Forecasting home prices, interest rates and the like take a lot of thought. Articulating it all in plain English can be even tougher. My favorite expert sources are Dr. Raymond Sfeir of Chapman University, Jordan Levine, chief economist with the California Association of Realtors, and Lending Tree’s chief economist Tendayi Kapfidze.

Separately, but in the same arena, data companies Attom Data Solutions, Black Knight and Steven Thomas of Reports on Housing also offer incredible insights on the housing and mortgage markets.

10)  Mortgage conventions and conferences offer lots of action and plenty of column fodder. To my utter surprise, Angelo Mozilo, the ex-CEO of failed Countrywide Financial (think mortgage meltdown days) was invited to speak at a mortgage conference a few years ago. He received a standing ovation from most of the crowd. Boy, was that a fun column to write.

Freddie Mac rate news

The 30-year fixed rate averaged 2.77%, 3 basis points lower, than last week. The 15-year fixed rate averaged 2.1%, unchanged from last week’s all-time low.

The Mortgage Bankers Association reported a 1.7% decrease in mortgage application volume from the previous week.

Bottom line: Assuming a borrower gets the average 30-year fixed rate on a conforming $548,250 loan, last year’s payment was $32 more than this week’s payment of $2,244.

What I see: Locally, well-qualified borrowers can get the following fixed-rate mortgages with one point cost: A 30-year FHA at 2.125%, a 15-year conventional at 1.875%, a 30-year conventional at 2.375%, a 15-year conventional high-balance ($548,251 to $822,375) at 1.875%, a 30-year conventional high-balance at 2.625% and a 30-year fixed jumbo at 2.75%.

Eye-catcher loan of the week: A 15-year fixed mortgage at 2.375% without closing costs.

Jeff Lazerson is a mortgage broker. He can be reached at 949-334-2424 or jlazerson@mortgagegrader.com. His website is www.mortgagegrader.com.