What Jets, Shrimp, and Mortgages Have in Common

“Christmas gift suggestions: To your enemy, forgiveness. To an opponent, tolerance. To a friend, your heart. To a customer, service. To all, charity. To every child, a good example. To yourself, respect.”–Oren Arnold

Plane over Water
(Image via Manny Kagan: Approaching San Francisco Airport)

The answer might surprise you, but in spite of the huge apparent difference they can all be called “Jumbo”.

When I fly across the country on a Jumbo jet, I always have my camera with me. These two images were selected from many photos I have taken throughout the years in the air and on the ground.

Ice Plane

(Image via Manny Kagan: Landing in a snow storm in New York)

Jumbo Shrimp is of course an oxymoron.

Jumbo mortgages are loans over $625,000. They are primarily offered by portfolio lenders and have different underwriting guidance. But here is where the confusion creeps in.

In terms of the terminology, loans up to $417,000 for single-family residence (SFR) are conforming; for 2 to 4 unit properties limits arehigher. And if the property is in Alaska or Hawaii, the limits are different again. Loan limits from $417,000 to $625,000, with their own scale of limits for 2 to 4 units, can appear under different names–some are called “Jumbo Conforming”. Then there are FHA loans which can go up to $729,750 for SFR and even higher for 2 to 4 Units. Loans for units have higher interest rates and some additional restrictions. The same goes for Jumbo Conforming, while real jumbos have completely different structures. You can borrow up to $5 million with limited LTV.

All jumbos have a reserve requirement, but the amount varies between lenders. Sometimes borrowers pay the balance down to get to a conforming limit, or we break the loan into “first” and “line of credit” (L/C) to get a better interest rate.

We are currently helping clients with quite a few jumbos. The amounts vary from $675,000 to $1,500,000 and every client has different preferences. I am sure you have a few friends who could use my help to get them Jumbo mortgages.


The holiday season is upon us!

(Image via Manny Kagan: One source can bring a lot of light)

When I wrote last week’s email, my daughter Tamar asked why I did not write about Chanukah. One of the reasons was that I did not have an appropriate image to illustrate it. I wanted to photograph all eight lit candles, which was only possible on Saturday, the last night of Chanukah. (Actually, there are nine, but the one in the center, called “Shamash” or “attendant” is there to light the other candles). The holiday of Chanukah, and the tradition to light eight lights (in ancient times, they were olive oil lamps) commemorates events that happened in the 2nd Century BC. The nine-branched Menorah or hanukiahcomes in different shapes and forms. However, there is only one very clear message. One light (one day) at a time, with the help of others, can illuminate our lives for many, many days and years.

And since Christmas is next week and you can light all the lights at once on the Christmas tree, I included an image that I photographed from Macy’s with my iphone last week.


(Image via Manny Kagan: Union Square, San Francisco)




Best Wishes,


How To Find a Low Rate Mortgage

Mortgage Rate
(image via Multifamilybiz)

“If you do not raise your eyes, you will think that you are the highest point.”–Antonio Porchia

I got a call from a client who received a letter that offered a 2.75% mortgage. We are in the middle of refinancing his 30-year fixed rate loan. He specifically came to my office to show me the letter, which you can see below with questions on whether or not I can get him such a low rate:

(click through to enlarge)

He only saw the numerical rate, but did not seem to notice that it was offered for a 5 year fixed FHA program that has an additional 1.25% monthly mortgage insurance payments. Some lenders spend thousands of dollars on mailings just hoping to catch clients who are drawn in by the low rates. After explaining about the “fine print” of the letter, I offered my client a 2.75% fixed for fifteen years with the closing costs. The only problem was that his monthly payments would be about $1,000 more than the loan fixed for 30 years at a 3.50% rate with no closing costs (which he ended up choosing).

Since interests are so low, we have been refinancing our clients’ loans that closed as early as this past April. One such client wanted her rate to be 3.375%. She checked rates online and called me almost daily to share her findings. My response was always the same, let me check my computer. We have a special program that reports daily rates from different lenders. Sometimes the information changes a few times a day, but at least this information is reliable and we can lock the rates that we see on our computer program. Because lenders are overwhelmed by the volume of applications, we have to lock rates for 60 days (to complete the loan), which can be different from the rates advertised online by East Coast lenders for a shorter period of time.

In this client’s case, we decided not to lock the rate but let it “float” instead, until the lender receives an appraisal report and the majority of conditions. At that time we can lock for 30 days. It is a gamble. In my book, you will find a similar case, but with a twist and a surprising outcome.

In spite of today’s low rates, some of my clients procrastinate, perhaps being overwhelmed by the process. My assistant Samantha is very good at helping make it a smooth process. Please act while rates are still very low.


The gift giving season is upon us. I am sure that some of your friends will be very grateful to receive my book, The Mortgage Game: The 5 C’s and How to Connect Them from you as a present. You can also download it for your Kindle or NookIf you need a more elaborate present, feel free to contact my friend Phil Wiseman at UPP (Unique Product and Promotions). He sent me a basket to congratulate me for my book publishing. It was awesome.


(image via Manny Kagan)

Last weekend I was in Dallas, Texas for a conference. We stayed there with friends and their neighborhood had a lot of elaborate Christmas decorations. The image above is my creative rendition of a tree covered with lights.


Best Wishes,


What We B*tch About (Or Talk About on the Beach)


(image via Wexas Travel)

Don’t wish it were easier…Wish you were better.” – Jim Rohm

I had a conversation recently, with a client seeking a new line of credit. We are in the middle of his refinancing, combining his first mortgage with his existing line of credit (L/C). This is a common request from borrowers who want to eliminate the uncertainty of an L/C, which is usually tied to the prime rate and is basically an adjustable loan. In most cases, after combining two loans into one and getting approval, we apply for the subordination of the existing L/C, which now is paid off and has a zero balance. That means that after getting a new fixed rate loan, borrowers will still be able to tap into their equity, as long as the remaining equity is not more than 80% LTV. In the case of our client, his L/C will mature after 10 years, which is going to be next year. He wanted to be sure that he will be able to get a new L/C. When I mentioned that one of the lenders we are going to apply to is U.S. Bank, he liked that since there is a branch close to his house.

After our initial conversation, my client went on vacation to Europe. He returned with very exciting stories about Vienna, Prague, and Budapest. Then as he got back to the reality of the mortgage business, he started to complain about U.S. Bank. Before leaving for his trip, he made monthly payments on outstanding bills…or so he thought.

Somehow U.S. Bank did not receive his payment on time. While visiting Prague, he received a call from his daughter that U.S. Bank urgently asked him to contact them. He finally placed a call to discover that his monthly car payment bill for $120 was due some time ago and there were no records of payment received. The bank agreed to wait for two weeks until his return home. Upon arrival, he went to the bank, made a payment, and received another call from U.S. Bank that same day, saying they did not receive payment. Now getting irritated, (the caller was not as nice as the first one), and feeling “unjustly” accused, it turned out that it takes 24 hours for the record of payment to show up. As a result of this unpleasant experience, my client no longer likes U.S. Bank or wants anything to do with them.

How many times have you been pissed off and made a hasty decision like this one?


(image via Dr. Pinna)

I look at the situation from a different point of view: U.S. Bank did my client a huge favor and he should be very grateful. In spite of his best intentions and efforts and claims, the bank did not have records of his “original” payment. Sh*t happens. If he did not receive a call from the bank and missed the payment, this would create a 30 day late payment on his credit history; this alone could drop his credit score down 100 points. I do not have to spell out what it means for the refinancing process.

Photo by Manny Kagan: I like to photograph from the air and have a number of interesting images. This photo was taken approaching San Francisco.

I read that 90% of airplanes use a navigation system to charter their course, yet the pilot still manually brings the plane back to reach its desired destination. The mortgage business is similar. When we receive loan documents from clients and submit them to the lender, there are many issues which seem to take over the progress of the course. Lenders have many unnecessary conditions and make errors. Appraisers mistakenly under-appraise the value of properties. Borrowers do not provide all the necessary documents on time or take vacations in the middle of the loan process. As a result, we have many reasons to complain and bitch about and we do.

In the end, we only have one destination and that is to get a good loan with a low interest rate…and we do.


Best Wishes,