All Forum Posts by: Zach Wain

 LOL, good catch.  I pulled a chart from ppic.org that shoes 27% of the CR goes to CA.  23% Colorado, 17% AZ, 10% utah, 9% Mexico, 5% NM, and 2% Nevada.  But, the CA portion goes to So Cal exclusively from what I can see

 The Fed also said inflation was transitory and they constantly change their target rate and plot predictions.  Q2/Q3 we will likely be in an "official" recession, whatever that hazy term means now, and inflation will be coming down quickly.  When do they start to lower rates?  Great question, that may take a little more time.  The Fed is intent on stopping inflation.

CPI and PCE are the two most important inflation reports, and the Fed bases their decisions off of these numbers (and unemployment).  I think by Q2/Q3 2023 CPI inflation will come down drastically, faster than most realize.  Annual CPI is the sum of the past 12 months of CPI inflation numbers.  The largest monthly numbers were in Feb, May, and June of 2022.  Once those numbers fall off, we could be on 12 month 2% target again much faster than the Fed is forecasting.  PCE is a little tougher to predict, but check out the CPI numbers.  This is headline CPI, not Core numbers.  Core strips food/energy and is more closed followed.  But, I can only find the headline numbers at the moment

Nov 21 - 0.7%

Dec 21 - 0.6%

Jan 22 - 0.6%

Feb 22 - 0.8%

Mar 22 - 1.2%

Apr 22 - 0.3%

may 22 - 1.0%

Jun 22 1.3%

jul 22 - 0%

Aug 22 - 0.1%

Sept 22 - 0.4%

Oct 22 - 0.4%

Nov 22 - 0.1%

The last 5 months we have 1% inflation, which is 2.4% annualized.  The Fed target is 2%.  If we continue this trend the big numbers start to fall off and get replaced by smaller numbers we could be in the 2%-3% range 6-7 months from now.

The biggest item, that I think could lead to CPI specifically dropping even faster is the way the CPI report calculates shelter costs.  8% of CPI is based on an actual rent survey, but its y/y changes not m/o, so even as rents are dropping in real time it will take another 3, 6, 9 months for rent numbers to come down on CPI.  Than, 24% of the entire CPI report is OER.  Owner Equivalent rent survey.  I have written a few pieces on it and will put up a post soon.  It takes 3-6 months at least after rents start to drop for the OER survey to start reflecting that.

Point being, "shelter" costs make up 32% of the entire CPI report and they are still going up!  Even though real life shelter costs are going down.  It may take another 3-6 months, but the CPI shelter costs will start dropping and that will further push inflation numbers down.  Combining that with the fact it takes 3-6 months after each Fed hike for the impact to start to be felt.

CPI numbers will be LOW very soon.  PCE is a little different, and I have a feeling the Fed will focus on whichever number is higher.  So, CPI is only half the battle

Realtors can, Loan Officers can not.  It is against RESPA to receive a commission unless services were provided.  My advice would be to create relationships and go for a win-win approach.  You send a deal to a lender you speak with, build some rapport, and maybe they send something your way one day.  It does not always work out, but that is best path.

"RESPA Section 8(a) prohibits kickbacks for business referrals related to or part of settlement
services involving federally related mortgage loans. 12 USC § 2607(a); 12 CFR § 1024.14(b).

RESPA Section 8(b) prohibits unearned fee arrangements, i.e., splitting charges made or
received for settlement services, except for services actually performed, in connection with
federally related mortgage loan transactions. 12 USC § 2607(b); 12 CFR § 1024.14(c)."

I agree with Joe, it sounds like 2 different properties/parcels.  They share a wall, but they are 2 separate parcels and titled separately.  What is the benefit of having 1 loan instead of 2?  I think you would have more flexibility with keeping them as individual units.  You can sell 1 and keep the 2nd if you wanted to.  Also, from a financing perspective, 1 unit properties get lower interest rates than duplexes.

I would keep it as is, unless I am missing a different goal you have in mind

The bank chooses from a pool or appraisers that comes from a 3rd party appraisal management company, or some banks have their own internal appraisal management system.  They do not pick out Bob or Jane specifically, but its more of a round robin system for appraisers close by that are approved, then they send the order out and see if the appraiser will accept it.

You can not pick your own appraiser, for obvious reasons, that is how many people committed appraisal fraud back in the day.

I understand the reason the investor wants a PPP, but for the majority of clients locking in a PPP when rates are high will impact their ability to refi in the near future.  If the deal makes sense, great, go for it.  But, I personally do not think long PPP terms are good for the majority of investors.  Plans change, maybe they want to sell to exit the market but now they have to pay a large fee to do so.  Maybe they want cash out to roll into the next deal, but they can't, etc etc.  

@Chad Acerboni is the property considered a 2nd home/vacation home or an investment property?  If its a second home, you could do a 75/15 1st and 2nd combo loan and only put down 10%.  If its an investment home, than its much tricker

@Ian Plocky - with 20% down, that quote is fairly in line.  25% down gets you a better deal on rentals.  Right now, the Yield Spread (YSP) between each 0.125% on rate sheets is very thin.  So, the higher rates are barely offsetting the added "price hits" we as lenders have for rental homes.  I am not sure when those YSP's will get bigger and offer better options for rental purchase with 20% down.

Conventional pricing is still leaps and bounds better than DSCR loans, so hang in there and get a couple quotes and hopefully you can find a better deal

 @Christian Cambridge - I have to be honest, I am not understanding why your rental property debt would not be counted against you.  If the mortgage is on your credit report, it does not matter from what account it gets paid from.  If you put the property under a S Corp, the gain/loss would still flow over to your personal schedule E.  

Or, maybe the lender explained it incorrectly...  Maybe there was enough income to cancel out the mortgage debt and so there was no gain or loss listed?

I am happy to review the details of your scenario to dive in a little further.