One Time Close…It’s BACK!

There hasn’t been a decent retail construction loan product since the collapse in mortgage banking back in 2008.  Consumers have been left to their own devices and local community banks to fund any home renovations or ground up construction projects.

In the North Bay, we haven’t seen substantial new construction in a decade, although there are several new projects that are online at this time.  Finally, the mortgage industry is responding with several new loan products that could help homeowners and investors to fund desperately needed new homes and rehabilitate dilapidated housing statewide.

Our One Time Close (OTC) Construction to Permanent loan product has a lot to offer potential home  owners.  At its core, it is based on either an FHA or VA loan as the permanent financing after the construction phase is complete.  Low to NO down payment and liberal credit qualifying means many families could qualify.

Here is a quick video on the product (90sec) and a flyer below:

Here is a PDF of the flyer: OTC_Flyer_NB

Remember, this product allows consumers to buy the lot, improve it, build and end up with a great fixed rate loan at the end with little to no down payment.

TRID…Closing Times on the Rise


After it jumped up by three full days in November the average time to close a first mortgage loan stabilized in December at 49 days. The November increase had been attributed to unfamiliarity with the new Truth in Lending Disclosure Rule (TRID) which went into effect for loans for which applications were received after October 3.

Ellie Mae’s Origination Insight Report showed that purchase mortgage closings did take one day longer, 50 days, to close in December but that was offset by a drop in closing times for refinances from 49 to 47 days.  The average time to close FHA and conventional loans remained largely unchanged at 49 days, while for VA loans it increased from 50 to 52 days.

Jonathan Corr, president and CEO of Ellie Mae said that the company’s customers are certainly impacted by TRID. He commented, “While the time to close loans remained consistent from November, the 49-day cycle is still a week longer than the time to close at this same time last year.”

Now the mortgage industry is sounding a bigger alarm, claiming some investors are refusing to buy certain loans once they close because of potential compliance failures.  The bottleneck is happening when lenders immediately try to sell loans in the secondary market. The fear is that some lenders could get stuck with loans if investors refuse to buy them, causing potential liquidity problems, especially for independent mortgage banks.

The first inkling of trouble came when Moody’s Investors Service warned in early December that several third-party review firms found more than 90% of the first pipeline of loans that closed after Oct. 3, when the rules took effect, had compliance violations. The findings were based on reviews of roughly 300 loans from a dozen lenders, said Yehudah Forster, a Moody’s vice president and senior credit officer.

Mark Mason, the chairman and chief executive of $5 billion-asset HomeStreet Bank in Seattle, said some nonagency jumbo loans, custom home construction loans, and down-payment-assistance loans offered through state housing finance agencies are not being purchased by investors. However, it is unclear how widespread the issue is.

It is crucial that the lending team you’re working with be well versed in navigating TRID and work as a team, helping to guide all parties to be compliant and close as quickly as possible.  Make sure to discuss this with your existing lending partners and find out what their closing turn times are on a weekly basis as spikes in volume can alter performance quickly.

Images are KEY

staged home

When you look at this picture, what comes to mind?  I notice what is NOT there.  There are no crooked images of an empty room, with the shades drawn.  There are not a lot of dark areas inside or shadows on the floor and walls.  Instead, the highlights are more as my eyes would see them.

The fact is that real estate photography requires a lot of interior shooting.  Surveys conducted every year by NAR and others tell us that people are using the web to shop for homes to buy or rent.  An overwhelming 90%+ of them tell surveyors that photos are the first thing they check out and they’re very important to them.  If they like the pictures, they’ll check out the descriptive text and property information.  If they don’t like them, they move on..

Many agents would rather run through a house in 10 minutes, shooting each room with their smart phone.  Others have embraced HDR, High Dynamic Range.  HDR photography uses 3 to 5 photos at different exposure settings to merge and create a single image with all of the bright and dark areas adjusted for a result like the one in the photo above.

Most of the digital cameras that are available in today’s market have a feature called “exposure bracketing.”  You set the camera to take your 3 photos with one underexposed, one properly exposed, and one overexposed.  You should use a tripod as you’re going to push the shutter button once and all three exposures will be created in rapid order.

Now you just need software to do the HDR process for you. There is free software out there, such as Picturenaut. There are many good software packages under $50 too. The software merges the three photos to create the perfect blend of exposures that are more like what your eyes do for you. Some of the newer digital cameras even have in-camera HDR, and the processing is done for you automatically.

If you are serious about marketing homes for sale or rent, you should definitely embrace HDR so that you can have the highest chance of getting the attention of your online viewers.