I found out last Friday mine was the winning bid for a HUD f/c. I already had a broker lined up to handle my financing. With my first HUD f/c, it took exactly 45 days to close. My agent told me recently that they have gotten worse, and it can take even longer now.
My DTI is around 40-45%, but I have good credit (690). A friend of mine in a neighboring state has several properties she wants to sell at a discount that I’d like to buy as well. She is willing to sell each at 85% FMV with tenants already in place. She said she is also willing to take back a second for 10% and just have her existing loans of 75% paid off. So, bascially, the deal would look as follows:
I might be able to put down 5-10% myself, which would make the financing around 65-70% FMV.
My question then is is this workable with conventional financing, given that I am now committed to a HUD f/c in 45-60 days, my DTI is a little high, tenants already in place, etc.?
Buying those 3 homes and the HUD really should not be to much of a problem, but I never bought a HUD so I do not know if they really check you out, however if your buying investment properties and putting them in your corp name a few days after the close they wont show up as yours.
I would recommend using 2 different LO. 1 for the 3 properties and 1 for the HUD. Do not mention the other deal to each officer, if they do not know they are not doing anything wrong. Plenty of people go and buy mulitple homes at once with 1 broker and the broker works each loan as the only home to different banks but I keep the HUD home seperate.
I have bought muilti homes from a single investor and the LO just did each home as an NOO like it was the only one. It takes about 60days before a mortgage will even show, so by time you close on your friends in say 20days, you will still have time before the notes hit probably. I know some banks report faster then 60days but I say take a shot, or ask a broker what the requirements are or HUDS.
Keep in mind though, the properties with tennants do count as income in your DTI ratio. The banks generally use 75% of the rental income as personal income on your loan. Plus you can always use a NO DOC to buy these and dont have to worry at all…
My broker is doing a NO DOC NOO for me now. I really got some good terms…95% LTV, 8% I/O and its 1 loan with no P.M.I. in it. Quick close too…Has a 1 yr yr hard prepay and 2yr soft prepay but they will find out what it takes to get them removed or lower… However I plan to hold the property for 3yrs anyway so my not bother…
Ignore what YRush just told you. You can search back through past comments and see some of the other ridiculous comments about financing that have been made. It’s a shame that someone with such experience and a currently sound business would ever try to mislead someobody else. I’d like to asume that there’s been some misleading going on from their lending source and they were ignorant to how fraudulent not disclosing information is.
Back to your concern. You should be ok with getting the 3 loans needed. The lender just needs to allow seller 2nds. This cannot be done with conforming loans and you will need to use a portfolio (alt-a) lender. There are only a couple that allow seller 2nds. It also sounds if you may need a reduced documentation loan such as stated or no ratio. You will also need to have reserves met for all the properties in which you have in underwriting.
No I am wondering what is exactly the fraud part here. Many investors buy mulitpe homes at one time and use 1 mortgage broker. I never mention doing homes OO, they are being done NOO which is legal there. Maybe you seem to think someone buying 3 homes is fraud or using 2 different brokers while closing several different unrelated deals.
Untill the loans are closed you do not have to claim them as an assest/liability. So what if I didnt close on 1 of them. Brokers deal with many banks. Some banks do let you have more than 1 homes. I know I have 4 preconstruction home loans, all construction to Perm loans with national city. Lets see…the broker did all 4 of them at one time thru the bank. Humm…the bank allowed 4 different loans, however I only needed to quailfy for 1 loan. Well each loan based as a single purchases. These loans were done Stated and total over 1mil, and trust me, the broker did not go and write down I am 10mil a yr to quailfy for the loans. The banks under writting guidelines at the time allowed someone to do upto 5 homes with them.
So back to fraud…If an active investor finds a deal and decided to buy 2 homes from someone, signs contract and then 2 weeks later sees another home they want but calls a different broker and is doing these homes No DOC or Stated if they have the income, he is committing fraud???
You should be disclosing anything you have a contract on or have in undewriting to your broker. It’s up to them to determine if the lender requires the information.
Better yet, when your broker asks you…will you not tell him. Or does he not due his due dilligence and ask?
Honestly I never thought it would be required to tell another broker about a contract I have on another property. Although I deal with several of the same brokers since they have all my info such as bank accounts ##'s and stuff, it makes it easier…
But no where on the 1003 does it mention possible deals. A mortgage broker is using the information on the 1003 when quailfying you for a loan and summits that to the bank. There is no pending contract spot to my knowledge…
That’s the thing about lending, what one mortgae broker does may be different then what another mortgage broker does.
In my opinion, part of the repsonsibililities of being a mortgage consultant is protecting my client and lender. Every broker has to sign a broker agreement with the lender before doing business with them. This includes a zero tolerance policy. Every lender may be a bit different in respects to what information they want given them; at least asking them and having the file noted prevents any later recourse.
The rest is a copy of one of those disclosures.
All approved Wholesale Loan Brokers (Correspondents) must be aware that the licensed real estate broker bears the responsibility for all actions of his or her employees or licensees. The broker is responsible for the content and quality of each application taken and each loan submitted to LENDER.
THE SUBMISSION OF A LOAN APPLICATION CONTAINING FALSE INFORMATION IS A CRIME!!
Types of Loan Fraud
Submission of inaccurate information, including false statements on loan application(s) and falsification of documents purporting to substantiate credit, employment, deposit and asset information, personal information including identity, ownership/non-ownership of real property, etc.
Forgery of partially or predominantly accurate information.
Incorrect statements regarding current occupancy or intent to maintain minimum continuing occupancy as stated in the security instrument.
Lack of due diligence by broker/loan officer/interviewer/processor, including failure to obtain all information required by the application and failure to request further information as dictated by Borrower’s response to other questions.
Unquestioned acceptance of information or documentation, which is known, should be known, or should be suspected to be inaccurate.
a. Simultaneous or consecutive processing of multiple owner-occupied loans from one applicant supplying different information on each application.
b. Allowing an applicant or interested third-party to “assist” with the processing of the loan.
Broker’s non-disclosure of relevant information.
Consequences
The effects of “Loan Fraud” are costly to all parties involved. LENDER stands behind the quality of its loan production. Fraudulent loans cannot be sold in the secondary market and, if sold, will require repurchase by LENDER. Fraudulent loans damage our reputation with our investors and mortgage insurance providers. The price paid by those who participate in “Loan Fraud” is even more costly. The following is a list of a few of the potential consequences that may be incurred:
Consequences to Broker
Criminal Prosecution
Loss of Real Estate Broker’s License.
Loss of lender access due to the exchange of information between lenders, mortgage insurance companies, including submission of information to investors, police agencies, the F.B.I., and the Department of Real Estate.
Civil action by LENDER
Civil action by applicant/borrower or other parties to the transaction.
Loss of approval status with LENDER
Consequences to Borrower
Acceleration of debt. Borrower shall also be in default if Borrower, during the loan application process, gave materially false or inaccurate information or statements to lender (or failed to provide lender with material information) in connection with the loan evidenced by the Note, including, but not limited to, representations concerning Borrower’s occupancy of the Property as principal residence. Note: Foreclosure under the borrower will not have the benefit of reinstatement in order to cure the default the Borrower must pay off the loan in full prior to the sale of the property.
Criminal prosecution.
Civil action by LENDER
Civil action by other parties to the transaction, such as seller or real estate agent/broker.
no where does it state i need to tell the broker about a pending contract…please show me that. So far no fraud it committed since i am not required to tell the broker about a property i do not own.
Even you stated that if “they do not know they are doing anything wrong”. So would the opposite of that be that if they did know, they probably wouldnt do the deal they way you wanted it structured.
I did type that. I mentioned keeping it seperate because I know HUD Homes have some rules for when investors buy. I also said I do not know how HUD HOME buys are done or how they examine your portofilo…I know nothhing about the purchase of them since i dont do them but thought its best to keep them out of the picture all together with the other deals…
I use several brokers like i said. In fact today i was talking to a broker about some condo conversions…They are fraud in alot of investors eyes on this board since the developer is clearly advertising on their website for the complex that they are giving a decorators credit back from 15-30K depending on the unit about 15days after the close… Plus paying 3% closing cost, plus 1 yr HOA, plus escorwing 1 yr of taxes…I know its all illegal…geeze…but all these brokers are doing them…guess they just want to chase the buck…
But I was telling there prefered lender of the developer whats on my credit so he can know what i quailfy for and he is like ok ,ok ,ok…He just wanted to know what mortgages show, history, FICO, he was even like lets do it 2nd home since its 250miles away… I didnt even mention it, i said NOO…he said 2nd home better rates and can do it with no soft or hard prepay…
But you would never do the loan with the decorating credits, right???