All Forum Posts by: Kenny Simpson

 @Henry Clark sounds like you are a BIG client for them that has been around a while.  For the new investor, this is NOT going to be the case.  They would NOT get service like this and they most likely will NOT know where to go.  Good for you but this is NOT the norm for everyone.  

When your bank or CU is NOT lending then what do you do? When your banker leaves what do you do? How do you know who is competitive or not out there? This has nothing to do with rate, it has to do with the whole deal; rate, pre-pay, I/O,LTV, LTC, etc. So many banks/CU backing out on our clients that are small and big that have those relationships. Those clients call their trusted broker.

commercial loans started to slow down big time in 2022 with the rise of rates. Deals started to make less since to buy, finance and this lead to a major slowdown in the commercial real estate market. CMBS financing down 80%+ and commercial loan financing is down 70% from the peek when rates were low and the appetite for making commercial loans was very healthy. Bridge debt/construction debt got hit hard because rates went from the 3's to 9's quickly and deals started to make no sense. If you are building a project and, on your way, you are pushing forward and trying to get to the finish line. If you have a deal that had not been financed at this time, your loan might have got canceled from the bank or that 50 to 65% LTC and 9 to 10% rate made no sense to proceed with the project.

This was all prior to the SVB bank drama, commercial lending was already feeling the pain, and little did anyone know things were going to get worse. Now here comes the failure of SVB/Signature Bank. All the focus is on these small reginal banks who make up 70% of commercial lending and now these banks are under the microscope. So naturally, NOT all but many banks are in the process of looking at balance sheets, liquidity and making sure they are able to survive during these times. Slow down lending and getting more liquidity seems to be the focus for many of them.

The panic is there is $1.5 Trillion worth of commercial loans that need to be refinanced by the end of 2024. Is the debt market going to be there? Will the banks be able to step up? Will the government have to come in and save the day? How many of these big/small real estate deals that were purchased with bridge debt or creative financing be able to refinance? What is going to happen? This is the trillion-dollar question?

Not all banks have STOPPED lending, there will be small banks that are in a great position to lend and did not overload their balance sheet with loans when rates low. Investors will be forced to look at alternative financing, expensive bridge debt to get through this period, raising money from investors to save a deal, working out a loan modification from current lender.

WHO CAN HELP? Experienced commercial loan brokers will be a HUGE savior for many investors, they will have the resources, lenders, private money sources and help investors find a way to finance deals in todays market.  If you are an investor and do not have an experienced commercial loan broker, find one fast because you will need them in today's market.

Quote from @Chris Martin:

Here is a link to the California Dream for All Shared Appreciation Loan Program. 

The corresponding Handbook lacks some important text. What if the house decreases in value? I know many will say that is impossible, but in that scenario will CalHFA send a check to the owner upon sale of the property? Here's an example image of the shared appreciation split. Below is a chart of Home Price Index of California from the St. Louis Fed (FRED) dataset:

I think everyone forgot about the Great Recession and subsequent drop in home prices. I'm not saying that kind of correction will happen again, but I am saying that there is a possibility that home prices can decline. 

When we have a slow down, recession rates will drop faster and then all these people will want to refi. If you have a 680, the pricing is will worse at a 97% CLTV, you have to equity to refi plus closing cost. There is NO inventory so for now values might be OK but if we get a bunch of inventory and recession yes these people will be upside down. Great for marketing for FTHB but in the long run who wants to have a partner on their primary residence and feel trapped.

 We will see but too many excited people and only a few out of the crowd will win in the end

 @Kevin Luttrell there will be so many wasted credit pulls, excited people, waste of work on pre-approvals and yes the process is messy due to overloaded system but this will be a waste of time for most when the dust settles. Plus when people want to refi, they will have to have 3% equity for 97% CLTV and $$ for closing cost. Seems like a bunch of hype and will disappoint more than it will help. This is the talk of the town but more people talking about it don't have a clue about it.

This program is everywhere, it is the talk of the town on social media, with lenders, agents, clients, loan officers, heck everyone is talking about this program. From the surface it seems great but now that the program has officially rolled out and everyone is trying to get a piece of the $300MM, it is like black Friday at Best buy.

As of March 30th, 2023 I am hearing crazy stories; you cannot get your one on one counseling session until April 15th and that will only get pushed out more and more. There are only 5 total counselors that do the 1 on 1 (1 hour sessions). So, if they must get through 2000 people, that will take probably 2 months. Even if people are locked in with the money and rate, how can they find a home when there is NO inventory. There are lots of people that don’t even need this program applying, they have the down payment and can just go buy a home. CalHFA rate locks are 30 days, they have extensions but those cost more money. The list keeps going on and on.

There is so much hype, so many people are going to be left disappointed, frustrated, and ultimately feel they got screwed in my opinion. If you noticed I am not even talking about the program, I am just talking about the process to get approved.

What are all the thousands of people that did what they were supposed to do when they realized they were a day late and the program ran out of money? Maybe they will put more money into the program? Maybe they will figure out a better system? Maybe they are just screwed and realized they wasted their time.

I would love to hear some feedback and thoughts on the process of this program and what you are hearing?

If you are tired of all the negative news, BS stories, drama and want the facts on what is going on in the real estate market today and how it compares to 2008 this is the webinar for you.  I promise you that if you spend 1 hour and tune it you will have so much more knowledge on what is going on in the market today and have data to back it up.  The next time a client calls, drama post or article and you are trying to make sense of it, imagine having the data and charts to back up the facts and having the confidence to realize what is real and what is BS.  

Looking to see how everyone's local market is doing?  Are you seeing inventory pick up now that we have hit spring?  Are you seeing more buyers come out since rates dropped again in March?

 If you have any structure that you are renting out on a property in San Diego and you want to get financing a permit is going to be a must.  If you paid cash and plan on never having debt on the property then you could get a way with it.  Keep in mind, which most people don't understand that if someone is renting an unpermitted unit in San Diego, they can technically take you to court and ask for ALL past rents back, so this becomes a liability to you.  It is all good until it is NOT good.