THE SAME CLIENT, A COMPLETELY DIFFERENT PROBLEM

I met this client about a year ago. The first time she came to me, she was going through a divorce and wanted to keep the family home. She needed to pay her husband his share of the equity. On the surface, it seemed like a simple case. But the loan amount was high, which meant she needed a significant amount of income to qualify. In her case, the income calculation was complicated. I submitted the loan to three different lenders before I finally found one that approved it. We closed the loan.

I thought that was the end of the story. It wasn’t. Meanwhile, she had started doing something completely different. She is from Italy, and while she was working for the company, she decided to open a pizzeria. She had a good idea of what she was doing, so she opened a small place in the Octavia and Hayes Valley area of San Francisco.

One evening, my wife and I went there and waited about an hour before we finally got our two pizzas. But it was well worth the wait. The pizza was so good that I couldn’t wait to go back. Before I had a chance to return, though, I tried pizza at another place. It wasn’t even close. Then she called me again. “Manny, I want to start a new restaurant.”

This time, she wanted to buy an existing restaurant, improve the space, and eventually bring two pizza ovens from Italy. She needed money. The purchase required about $550,000, plus I estimated another $200,000 or so for improvements. Now I had another mortgage problem to solve.

I started looking at the possibilities. One option was an SBA loan. I did some research and found that it might work. But loans for purchasing restaurants can be complicated, and an SBA loan could require additional collateral, potentially including her home. I found another possibility: a conventional line of credit. That was simpler, but it would not give her enough money for what she wanted to accomplish.

Then I found a third option that was very interesting: a reverse mortgage second on her home. The interest rate would be somewhat higher, but because of her limited conventional income, this option could potentially provide the money she needed without requiring the same income qualification as a traditional loan.

So that’s where we are now. I introduced her to one of my contractors, who will give her an estimate of what it will cost to renovate the restaurant. Then she will have to finalize the real estate transaction. After that, I’ll work on the financing.

Look at what happened. The first time I met her, she needed a mortgage because of her divorce. A year later, she needed money to buy a restaurant and build a new business. Same client. Completely different problem. And that’s one of the things I have learned after more than 40 years in the mortgage business. There is rarely a simple solution. But there is often a solution if you are willing to look for it.  You just have to keep looking until you find the right one.

Manny Kagan
Mortgage Broker | 40+ Years of Experience
(415) 225-7920

 

 

WHAT IS SIMCHAT TORAH?

On the Jewish calendar, the evening of Saturday, October 3, begins the celebration of Simchat Torah, which means “Joy of the Torah.” The Torah is traditionally understood to have been given to Moses at Mount Sinai. Simchat Torah, however, is a much later tradition. It developed in the medieval period and became the celebration that marks the completion of the annual cycle of reading the Torah—and immediately beginning it again.

The essence of Simchat Torah is simple: the end of one story becomes the beginning of another. We finish reading the Book of Deuteronomy, the last book of the Torah, and then begin again with the first chapter of Genesis. There is no real ending—only a new beginning.

There are many traditions surrounding the holiday. Communities gather in the Synagogues for singing and dancing, children participate, and people dance with the Torah scrolls. It is one of the most joyful celebrations in the Jewish calendar.

When I grew up in Riga, Latvia, which at that time was part of the Soviet Union, religious observance was largely suppressed. For me, Simchat Torah was special. It was one of the few occasions when Jews—many of whom were not observant—would gather at the only surviving synagogue in Riga. People sang and danced, sometimes even in the streets, while watched by KGB agents.

The Torah means “instruction” or “teaching.” It is divided into 54 weekly portions, which are traditionally read in synagogues on Saturdays, with additional readings on Mondays and Thursdays. Some people also make Torah study part of their daily routine. I belong to that group.

Reading and studying the Torah has been part of my life for many years. I even taught daily Torah classes at a Jewish high school. I wrote about my experience reading the Torah in my recent book, Reflections: The Healing Images. For that book, I selected one sentence from each Torah portion and added my own short reflection.

Now, as we begin a new cycle of Torah reading next week, I am planning another book. Each week, I want to start with one of my questions about that week’s Torah portion and then explore answers from the wisdom of Jewish scholars—from traditional interpretations to modern perspectives. I expect the book to be available by the end of 2027. Stay tuned. And to commemorate this beautiful holiday, enjoy these three beautiful natural bouquets of roses.

Simchat Torah reminds us that every ending can be a new beginning.

 

 

HOW TO REMOVE AN EX-HUSBAND’S NAME FROM THE TITLE

I received a phone call from a woman who told me that she had been referred to me by her financial planner. As soon as she told me who the financial planner was, I had a pretty good idea what kind of case this would be, because her planner is specialized in helping women who were going through divorce.

This time the situation seemed simple. The client and her husband owned two properties. They had decided to sell one of them. The other was a condominium where she lived with her mother, and she wanted to keep it. There was only one problem. Her husband’s name was on the title, along with her mother’s and her own name. She wanted to keep the condominium, and to  remove her husband’s and mother’s name from the title. To do that, we need to refinance their existing mortgage.

The question was: Could she qualify for the mortgage by herself? Normally, the first thing I look at is income. In her case, there wasn’t much conventional income. Her main source of income was from helping and caring for her elderly mother.

At first, it looked like a challenge. But then I learned something important. Over the years, she had accumulated and saved money in retirement accounts. When we looked at the numbers, she had more than $1 million in her IRA accounts. She didn’t have a large conventional income, but she had substantial assets. That changed the picture.

I was able to use a program that allowed qualifying income to be calculated from her assets. It is sometimes called an Assets depletion program, because the lender calculates a qualifying income amount by treating a portion of eligible assets as if they were being used over a specified period of time. That gave us enough qualifying income for her to obtain the mortgage she needed. She could keep the condominium under her own name. And she could do it while the divorce was still in progress.

This was not something I learned from a textbook. I learned many of these tricks of the trade during more than 20 years of working closely with a divorce attorney who specialized in helping people reach amicable divorces. Over the years, I learned that when people are going through a divorce, the problem is not always simply, “Who gets the house?” Sometimes the real question is: How can we structure the financing so that the person who wants to keep the house can actually afford to keep it?

There can be more than one way to solve a mortgage problem. You have to look beyond the obvious. In this case, her income was not enough by itself. But her assets told a different story. And that was the key to finding the solution.

If you’re planning to get a mortgage and want to know whether your loan can actually be done, give me a call. I know how to help.

Manny Kagan
Mortgage Broker | 40+ Years of Experience
(415) 225-7920

SOMETIMES YOU HAVE TO GO OUT… AND SMELL THE ROSES

When I decided to check where the phrase “Go out and smell the roses” came from, I discovered that the actual expression is “stop and smell the roses.” It is often attributed to the American golfer Walter Hagen, who wrote: “You only live once—but if you work it right, once is enough.” He also wrote about not hurrying and making sure to smell the flowers along the way.

But I see a slightly different meaning in the idea of “go out and smell the roses.” Instead of waiting for the roses to be in front of us, sometimes we have to make an effort to go out and find them. For us, one of those places is  Portland, Oregon.

Portland is known as the “City of Roses.” During World War I, roses and other plants in Europe were threatened by the war, and Portland became a safe place for preserving and growing roses. Today, the International Rose Test Garden has hundreds of varieties. We visited it last year, and the experience was overwhelming—in the best possible way.

Not far from where our daughter and her family live, there are four squares covered with roses. The gardens are  divided into different sections, so you can walk from one area to another and have a completely different experience with the roses.

We came back again this time. The smell of the roses was overwhelming. But what impressed me even more was seeing how many different people came there simply to enjoy them. I saw teenagers who came especially to smell the roses. I saw a family having lunch. I met a woman who had been taking care of the same small section of the garden for 27 years. The sections are cared for by volunteers, many of whom have developed a personal relationship with their little piece of the garden. I saw another woman sitting on a bench, reading and writing notes.

My granddaughter loved the place because there is a swing nearby. She spent time swinging while my wife and daughter sat on a bench. And I thought: What could be more enjoyable than this?

Sometimes we have to go out and smell the roses. And you don’t have to travel to Portland. Here in the Bay Area, we have the Rose Garden in Golden Gate Park. It is smaller than what we experienced in Portland, but it can provide the same opportunity to stop, look, smell, and simply enjoy being alive. So, my suggestion is simple: Go out and find your roses.

It doesn’t necessarily have to be roses. It can be flowers, trees, the ocean, a park, a bench, a garden—or simply a place where you can sit and enjoy the moment. Sometimes, you just have to make the effort to go out and smell them.

In my last Friday’s story, you can see three roses which I photographed in the garden especially for my last week’s post. If you would like to see more beautiful flowers and read words of wisdom, you can find it all in my book Reflections which you can buy on Amazon.  

Thank you. And share this story with a friend.

Russian roulette is a dangerous game of chance in which a single bullet is placed in a revolver, the cylinder is spun, and the trigger is pulled without knowing what will happen. I use this expression because I’m currently working with two clients who, in my mind, were playing mortgage Russian roulette.

The first client was buying a condominium in Millennium Tower. I have already closed 16 transactions there. She was told that Wells Fargo could finance the building. Two weeks later, she discovered they could not.

She came to me with very little time left to get the loan approved. Because I knew the building and which lenders could work with it, I was able to get her approval—and everything is now on track.

The second client was buying a condominium in another building that is involved in a lawsuit concerning the building owners and the parking lot. A lawsuit can make financing a condominium much more complicated.

I sent the complete package to six different banks. Only one said yes—and we are moving forward with that lender.

In both cases, the clients were dealing with lenders who were not equipped to handle the particular circumstances of the buildings. The clients had no way of knowing that, and neither did their real estate agents.

That is why I don’t play mortgage Russian roulette.

I know which lenders can handle difficult condominium loans, and when a particular lender cannot do the loan, I look for one that can. Otherwise, you can waste weeks of everyone’s time and potentially lose the property.

If you’re planning to get a mortgage and want to know whether your loan can actually be done, give me a call.

I know how to help.

Manny Kagan
Mortgage Broker | 40+ Years of Experience
415-225-7930

ASKING FOR FORGIVENESS

Sunday evening, according to the Jewish calendar, begins Yom Kippur, which translates as the Day of Atonement—a day of repentance and asking for forgiveness.

Traditional and Orthodox Jews follow certain rituals. After the last meal on Sunday evening before Yom Kippur starts,  they fast for the entire day—no food or water—and spend much of the day in the synagogue, praying from a special prayer book. The prayers are in Hebrew, sometimes accompanied by translations into English, Russian, or other languages. There are also other traditions, such as wearing white and not wearing leather shoes.

But what about those who are not religious, or even those who are not Jewish? Don’t we also need to ask for forgiveness? And from whom?

If you believe in God, perhaps the answer is simple: ask God to forgive you for what you have done during the past year. But before asking God for forgiveness, perhaps we should ask forgiveness from the people around us.

During the past year, we may not always have acted to the best of our abilities. Sometimes we realize that we could have done something differently or treated someone better.

One of the Yom Kippur prayers asks for forgiveness for sins we may know about—and even those unknown to us. So, to my friends: if I offended you, disappointed you, or did something during the past year that wasn’t right, please forgive me. Next time, I’ll try to do better!

I also asked myself: What images should I share with you for Yom Kippur? I decided on roses. They are simply beautiful. Enjoy them, and thank you for everything. I look forward to being here with you and serving you in the coming year.

G’mar Chatimah Tovah—may you be sealed for a good year.

Share it with your friends. 

 

HAPPY NEW YEAR 5787!

If you are reading this on Friday, this evening begins the celebration of the Jewish New Year—Rosh Hashanah.

The Jewish calendar follows a different system from the Gregorian calendar most of us use every day. The year 5787 represents, according to Jewish tradition, the number of years since the creation of the world—and, symbolically, the creation of the first human beings, Adam and Eve.

Rosh Hashanah is much more than simply the beginning of another year. It is a time of awakening. In the synagogue, we hear the blowing of the shofar, the ram’s horn. Its sound is like a wake-up call, reminding us to stop, listen, and look at ourselves.

Ten days later comes Yom Kippur, the Day of Atonement, when Jews traditionally reflect on their actions during the past year, ask forgiveness, and seek to make things right. But the ten days between Rosh Hashanah and Yom Kippur are especially meaningful. They give us time to acknowledge our shortcomings and think about what we would like to change or improve in our lives. Perhaps that is a lesson we can all take from the holiday.

Sometimes we need to slow down before we move forward. We don’t always need to start a new business, begin a new relationship, or make another major decision. Sometimes the most important thing we can do is pause and ask ourselves:

What can I do better this year?
How can I become a better person?
What would I like to change in my life?

Rosh Hashanah is also a celebration. Traditionally, we eat apples dipped in honey, symbolizing the hope for a sweet new year, and gather with family and friends for festive meals.

The holiday is traditionally celebrated for two days. It is connected with the Jewish practice of determining holidays according to the new moon. After the destruction of the Second Temple in 70 CE, observing the new moon became more difficult, and the two-day observance became established for communities outside the Land of Israel, with many Jewish communities continuing this tradition today.

So, Rosh Hashanah is both a beginning and a reminder: life is precious, time moves forward, and every new year gives us another opportunity to improve ourselves.

And now, a personal connection to the apples you see in these images. The three apple images came from our recent visit to Portland, Oregon. While we were there, I visited a farmers’ market with an incredible variety of apples. I photographed 17 different apples, and from all those images, I chose these three to share with you and with my friends. It seemed especially appropriate to share them now—at a time when apples and honey remind us of our wish for a sweet new year.

So, as we begin the year 5787, my wish for you is simple: May you have a joyful, healthy, peaceful, and prosperous New Year, surrounded by people you love.

Shanah Tovah! May it be a good and sweet year for all of us.

WHY OWN AN ADU?

Accessory Dwelling Units, or ADUs, have become increasingly popular in the San Francisco Bay Area and beyond. Because for years, many additional living spaces were built without permits. Today, cities recognize that bringing these units into compliance can create additional housing—and additional tax revenue. But if you want to use an ADU legally and have it recognized for financing purposes, it generally needs to meet current building codes and permitting requirements. There are also homeowners who have enough space in their backyard to build a completely new ADU.

I recently came across an interesting example. We are financing a mortgage for a client who owns a two-unit rental property. She also built an ADU legally, with the proper permits. Because the property is outside San Francisco and the ADU was legally built, we can treat it as an additional dwelling unit and, under applicable lending guidelines, use the additional rental income to help her qualify for the mortgage.

I recently came across an interesting example. We are financing a mortgage for a client who owns a two-unit rental property. She also built an ADU legally, with the proper permits. Because the property is outside San Francisco and the ADU was legally built, we can treat it as an additional dwelling unit and, under applicable lending guidelines, use the additional rental income to help her qualify for the mortgage.

I am writing this from Portland, Oregon, where we came to celebrate our granddaughter’s birthday. We rented what is essentially an ADU—a cottage, studio built many years ago behind the main house. It had everything we needed: a little kitchenette, bathroom, and, most importantly for me, a king-size bed. I had a very good night’s sleep!

For the homeowner, that small additional space creates additional rental income. But an ADU doesn’t have to be small. Depending on the property and local regulations, it can be large enough for an owner to live in while renting out the main house. That can create a significant additional source of income, particularly during retirement.

So, why own an ADU?

It can provide housing, flexibility, and another source of income—and in some situations, it can even help with mortgage qualification.

ADUs are becoming an important part of addressing the shortage of rental housing in San Francisco and many other communities. And there are even financing programs available to help homeowners build them.

If you are considering building an ADU, converting an existing space, or using rental income from an ADU to help with financing, I’d be happy to discuss your options. Give me a call: (415) 225-7920

Manny Kagan,
Your professional mortgage broker since 1983
(415) 225-7920; mannykagan@comcast.net

LIFE GOES ON

As you’re reading this, we are in Portland Oregon celebrating our granddaughter’s sixth birthday. She lives here with her mom and dad, and having her in our life gives me a wonderful opportunity to see how much a child can change from year to year. We see her every year, and every time we come back, she seems to be a little different. She is growing, learning, changing, and transforming into a new human being right in front of our eyes.

Of course, we communicate regularly through FaceTime, but it’s not the same. There is something about being together in person that allows you to see the changes you might otherwise miss.

Recently, we attended friend’s birthday party. There were people around our age whom I hadn’t seen for many years. Some of them I probably wouldn’t have recognized if I had passed them on the street. And then I realized something. This is how I have changed, too. The difference is that when I look in the mirror every morning, I don’t see it. I see the same Manny. But the difference is there. Time is moving. Life is moving. And we are moving with it.

On Wednesday I opened the San Francisco Chronicle and saw a rendering of a huge new building—175 units planned for our neighborhood in West Portal. West Portal has been a sleepy neighborhood for generations. Much of it has looked and felt the same since the 1920s. And now someone wants to bring a major change. Do I like the change? No. I don’t think this building belongs there. It wasn’t designed for this kind of development. But whether I like it or not, sooner or later, it will probably be built. And maybe that is the lesson.

How do we relate to change? How do we recognize that change is coming? Sometimes, all we have to do is look around us. Watch a child grow. Meet someone you haven’t seen for years. Look at your neighborhood. Look in the mirror.

We may not notice the changes happening to us every day, but they are happening. And perhaps the greatest evidence that life is going on is not what we see in the mirror. It is what we see when we look around us. Our granddaughter is six now. Next year she will be seven. And I will be another year older. The neighborhood may look different. The world will certainly be different. And that’s okay. Because whether we like it or not— life goes on. 

The three images you see here are self-explanatory.

Enjoy and share.

“REVERSE MORTGAGES ARE BAD!” — UNTIL YOU NEED ONE

Last week, I had lunch with a client I hadn’t seen for quite a while. He had previously referred his daughter and son-in-law to me for a line of credit, and I was able to help them. During lunch, we started talking about mortgages, and I mentioned reverse mortgages. His reaction was immediate: “Reverse mortgages? They’re bad!” I asked him why, but he couldn’t really explain it. He simply had a very negative impression.

Then I started telling him about some of the people I had helped with reverse mortgages. After hearing the stories, he admitted, “I’m an ignoramus. I really don’t know much about reverse mortgages.” And that conversation stayed with me because he is not alone. A lot of people have strong opinions about reverse mortgages without really understanding how they work or how they can help.

When I got back to my office, I received a phone call from another client. Ten years ago, she came to me wanting to buy a home. Her financial situation was a mess, but I figured out a way to get her a mortgage. She bought the house, and for the next ten years, she lived there.

Now her daughter called me. She said, “My mother doesn’t have enough money to make her mortgage payments. I’m afraid the house could end up in foreclosure.” I looked at her situation and said, “Maybe a reverse mortgage is the solution.”

She owed about $280,000. I ran the numbers, and the reverse mortgage could provide about $180,000. That left a $100,000 gap. So, what did we do? I remembered that about three months earlier, the daughter’s mother had also come to me for a reverse mortgage. I had helped her obtain a line of credit. I called her and asked, “Would you be willing to help your daughter with the $100,000 she needs?” After some hesitation, she agreed.

Think about that. A mother and daughter—both homeowners, both using reverse mortgage solutions—and one was able to help the other avoid a serious financial problem. This is why I don’t like it when people simply say, “Reverse mortgages are bad.” They are not for everyone. But neither is a conventional mortgage, a refinance, or a home equity line of credit.

The important thing is to understand your options and see whether one of them makes sense for your situation. And you don’t have to wait until you are in trouble. Sometimes the most valuable thing you can have is a reserve—a line of credit you can use when you need it.

If you have questions about reverse mortgages or home equity, or you know someone who might benefit from understanding their options, give me a call.

Manny Kagan,
Your professional mortgage broker since 1983
(415) 225-7920; mannykagan@comcast.net