American Pacific Mortgage

American Pacific Mortgage

Thursday, November 30, 2017


Conventional loan limits for 2018 have just been announced. They will be $453,100 for lower cost areas, but in high cost counties such as Los Angeles and Orange County, the new limit will be $679,650. This represents a big jump from the current high cost county limit of $636,150. The loan limits for VA loans and FHA loans have not yet been announced, but in 2017 they matched the conventional loan limits.

This is great news for current homeowners who may want to refinance and take advantage of the increased equity in their homes. It is also beneficial for home buyers. Conventional loan programs offer more flexibility vs. jumbo loan programs--in terms of higher debt-to-income ratios and less income documentation. The new loan limits represent increased buying/borrowing power.

Please call me if I can be of assistance! I welcome your questions.

Wednesday, November 15, 2017

Tax Overhaul is Opposed by CAR

The California Association of Realtors has come out vehemently against the proposed changes to our tax code, which would eliminate the tax deduction for state and local taxes, as well as the deduction for mortgage interest for all loans over $500,000. Loans currently held with higher balances (up to $1 million) would be grandfathered in. Further it would eliminate the interest deduction for 2nd home mortgages. Deductible property taxes would be limited to $10,000. According to CAR the average homebuyer in the state would pay an additional $3000 in taxes annually.

Living here in the sunny state where it seldom rains, this would definitely put a dark cloud over the real estate market. Our median home price here in Orange County is $790,000 and in LA County it is $595,000. Already, home affordability rates in Southern California have fallen to the lowest level since 2008 and statewide housing affordability fell to a 10-year low as the tight housing market has driven prices higher and higher. The percentage of California home buyers who can afford a median-priced home in 3rd Q 2017 fell to 28%. These statistics do not apply to condos but to single family homes. Condos are more affordable, and 38% of Californians can afford the $440,000 median-priced condo.

To be clear, all these statistics assume a 20% down payment. With less down (including many first-timers) the affordability is lower...and with more down payment, affordability rises.

But, here in California and other high-price states such as New York, affordability will drop even more if the tax bill goes through as proposed. Real estate values will surely drop as fewer and fewer buyers can afford homes. A recent article in the WSJ notes that in NYC sales are slowing as buyers ponder the effect the tax changes could have to their disposable income.

We always advise clients as to the after-tax consequence of owning a home with a mortgage, and how the interest and RE taxes will provide them with a deduction on their tax return. We'll see!

Sunday, November 5, 2017

Abusive Lending Practices -- e.g. Bad Underwriting

I read today's Mortgage column in the Orange County Register. The columnist referenced a number of underwriting issues that came up during the home loan process; and the results. You can read about it here:

I've read this column for years and know the author. He is a good guy who is also a good loan originator. But, the issues he cites are pretty hard for me to imagine at Catalyst Lending. With our own in-house underwriters for almost all loan programs, we rarely have to deal with outrageous conditions or situations similar to those he cites.

To wit:

1. Unmarried couple required to marry prior to closing their FHA loan? No. Never happened on my watch and never have had this become an issue.

2. Self-employed borrower required to provide more income back-up after loan documents have been signed, but prior to funding. Never happens to my clients. I will add that very occasionally we are asked to provide an item post-closing that wasn't properly signed with loan documents. But never more back-up income items.

3. Married borrower buying as sole and separate property is asked to pay her new husband's tax lien. Not with my title guy. It isn't her lien, and he's not on title or on the loan.

4. Underwriter requests a physician's note that borrower won't become ill again and miss work. Huhhh?

5. Foreign born naturalized citizens are asked to provide certificate of citizenship although they have USA passports and Social Security cards. NOT!

All these items are virtually unthinkable in the environment my team works in. Our underwriters are extremely competent; always check guidelines for investors and programs; and virtually never request outrageous conditions for loan closing.

Catalyst Lending has our own team of underwriters and processors, and they are experts. We work together to make the loan process a positive experience. And, I have much more control over the process. 'nuff said.

Friday, October 13, 2017

How Parents Are Helping Their Kids Buy a Home!

I recently closed a refinance for a couple whose parents provided the funds for them to buy a home all-cash. Why? In today's market, this made their offer much more attractive to the sellers, since they could close quickly and without any loan or appraisal contingencies. After closing, I was able to assist them with a refinance to recoup funds to repay their parents. A total win-win. The article in today's Wall Street Journal details exactly the same scenario, and how many younger couples are getting this same assistance from their parents. go to:

Millennials’ New Weapon in Bidding Wars: A Parent’s Home Equity

Parents refinance their own homes to help their children compete as all-cash buyers in hot housing markets. When the purchase closes, the children pay the parents back.

Tuesday, October 10, 2017

Loans for Self-Employeds

I can't begin to tell you how many times I've had the opportunity to close a home loan for a self-employed individual or family after they have been turned down elsewhere. Maybe it is because I care enough about my clients to take the time to carefully analyze both individual and business tax returns, to understand what their real income is, at least according to standard underwriting practices.

Are there loan programs out there for those who can't qualify with income shown on tax returns? Yes, but they usually rely on deposits either to individual or business bank statements...and they typically require a larger down payment, and carry higher interest rates. Some programs today only require one year's business returns, without averaging income over a two-year period--which helps many.

Any way it works out best for the client, I love solving problems--and seeing them achieve their dream home, or dream loan. Today I am helping an artist who wants to buy a home but doesn't show much income on her tax returns. By eliminating her studio rent, which she she won't need once she is a homeowner, we can attribute more income to her in order to help her qualify for a larger loan.

Sometimes I will completely eliminate a self-employed spouse from the loan application, and just take the W-2 employee in order to qualify. It does take thinking outside the box. And TEAMWORK


Tuesday, September 12, 2017

FNMA Relaxes Guidelines

This is great news for both purchase and refinance loans at the conforming loan level, up to $636K in Orange and LA counties.

Updates include:

* Debt-to-income ratios up to 50% from previous 45% max
* Loan to Value for ARM loans up to 95%
* One year's tax returns required for self-employeds
* Disputes on credit report do not need to be removed
* Timeshares now treated as installment debt vs. mortgage loans
* Student loans in deferment or income based payments accepted as reported on credit report
* Alimony payments reduce income vs. being taken as a debt against income
* Mortgages and/or debts paid by others are excluded from debt calculations

These make qualifying for a mortgage much easier for many.

Big news in my office is the new addition to my team of my daughter Katie, who is a loan officer in training. Keeping it all in the family!

Tuesday, July 11, 2017


Interest Rates have begun to rise again, after a drop last month. However, we are still better off than in the 1st Q of this year. The economy is improving, slowly but surely! You can still find rates in the 3’s if you are willing to go for an ARM, or a Government loan (FHA or VA) and depending on your loan size, credit scores, loan purpose, etc. etc. Most programs have rates in the low to mid-4’s. Realistically we are still very near the bottom of the rate cycle. Purchase specials for jumbo loans are lower than most conventional loan programs.

I just concluded a rent vs. buy analysis for clients, and determined they were better off, especially on an after-tax basis, to buy vs. trying to find a rental. The rental market is just crazy, and availability is scarce!

Reverse Loans are gaining in market acceptance. Borrowers are finally understanding that they still own the home, can sell it or refinance if they wish. The biggest benefit of these loans is the ability to have a line of credit allowing draws as needed for emergencies or major expenses (a roof, a car, etc.) The unused portion of the line available increases or grows like an investment, so over time there is more credit available. I’ve run these scenarios for clients as well as investment professionals, who can see that in ten years the credit line will nearly double.

This is a very useful retirement planning tool. A client age 63 with a line of credit beginning at $320,000 and home value of $636,000 or higher will have a line of credit available in the amount of $573,000 in ten years, assuming no draws during the first ten years, and a home free and clear. This is essentially a return of over $550,000 on initial costs (investment) of $11,000 in upfront costs (including escrow, title, and Mortgage insurance.) Not bad!

Home Remodeling is on the rise, especially here in the OC. Homeowners have seen tremendous appreciation since the recession, and many are taking advantage of their increased equity to pull cash out for a makeover. Kitchens and bathrooms top the list. Landscape upgrades are another popular item. A recent study shows that 15% of California homeowners plan to remodel in the next year. We recently remodeled our bathrooms--and what a difference! We LOVE them!

Family and Travel News!

Paso Robles is really beautiful, and it reminds us of Napa/Sonoma over 30 years ago. We went for a long weekend in April with dear friends, and had a blast visiting wineries (not too many in one day!!) hiking, picnicking and dining. Our favorites were Daou for a gorgeous setting, but we had extra-special tastings and treatment at Opolo, Epoch and Four Lanterns.

We threw in a drive to the coast to visit a couple of dive bars in Cayucos.

We dined at Artisan (highly rated) but our favorite…after two days of wine tasting…was Fish Gaucho. They offered great high-end Mexican food, heavy on the seafood. Highly recommended.

Our trip took us along the coastal route through Santa Barbara coming and going, so of course we stopped at Brophy Bros in the SB Harbor on the way up, and at Beachside Bar-Café on the way back, in Isla Vista. Lots of good eating and fine wines!

In June we headed out to Bermuda for the first leg of an 18 day trip. We watched two days of racing for the America’s Cup; went scuba diving one day (too rough after that for diving) and did lots of sunning, swimming and touring. Bermuda is beautiful but extremely expensive. We quickly learned we were better off to pick up dinner “to go” at Mr. Chicken, or order pizza at our lodging (St. George’s Club) than to pay top dollar for mostly mediocre food. We still had a fabulous time! Too bad we lost the Cup to New Zealand in the finals, but we have faith America will be back!

Next leg we flew to Tortola (British Virgin Islands) to pick up our 48 foot Catamaran and set out on our week-long sailing adventure with two other couples. These vessels are basically floating condos with sails, with four bedrooms and private baths/showers. I highly recommend this trip although you might want to hire a captain if you aren’t comfortable sailing on your own. We had a few minor issues with malfunctions (mostly of the mechanical type) but all-in-all it was smooth sailing and/or motoring, depending on the winds and our direction to the next port.

We stopped at different bays every night and moored all but one night. We ventured onto land for dinner all but one evening; danced, listened to music, and generally had a wonderful time. The most exciting moments centered around our dingy rides to shore (entrance and exit can be tricky) but this provided for many laughs and a few unexpected swims. Identities withheld.

We had three days of very good diving and were very happy with the sites and the dive masters. But it was a pain to lug all the scuba equipment around from one locale to the next.
Favorite spots: Marina Caye, Cane Garden Bay, Bitter End and Norman Island. Also the Baths are a must-see.

Finally we flew to San Juan, Puerto Rico for two nights at El Convento, a wonderful hotel in Old Town San Juan. You can’t really go wrong anywhere here in Old Town. Most of the restaurants offer Tapas. The food was amazing—best of our trip—and very reasonable. The Hotel is highly recommended as the place to stay, and also very reasonably priced with outstanding service. We loved the colors, the history, the music, the rain, and the food. I want to return!

My daughter and granddaughter are visiting for a few weeks this month and I can’t wait. Baby Kai is almost 10 months, and moving fast. I need to purchase a play yard to keep her under wraps while they are here. Can’t wait!

Steve and I continue to be active in the Dana Point Yacht Club. He's started racing, and I've joined the Race Committee to help with scoring (not an easy task!) We've made so many new friends and enjoy our time there.

I love hearing about your adventures too, so please write me! Keep in touch!

Friday, February 24, 2017



The fall election brought about many changes, not the least of which was an immediate increase in interest rates, resulting in a .5% to 1% bump in mortgage rates across the board. So far, we haven’t seen much effect on home prices, which seem to be holding at a steady increase, albeit at a slower pace than the last few years.

The attention to Reverse Mortgage financing is building as more and more aging baby boomers reach the age of 62. There are many uses for reverse loans, not the least of which is to access untapped equity in your home, or to purchase a new home. They are gaining in acceptance as consumers realize they do still own the home, and may will it to their heirs, but can live without making a payment against the mortgage. Oftentimes I set these up as a line of credit to be used in the future for emergencies, or basic living expenses. More financial advisers are encouraging clients to take out a reverse loan soon after turning 62, as a way to boost their next egg. The credit line available to them (and unused) grows over time and can provide substantial monthly income in later years.


Last June saw me in Dallas for some fun in the Arts District. Always great restaurants!

July 4th Steve and I ventured back to King’s Beach in North Lake Tahoe, where we were married the year before. We stayed in the same home on the waterfront, and had a wonderful visit with dear friends, each of us taking turns cooking dinner. We kayaked, swam, read listened to music and drank a lot of Rombauer Chardonnay.
And, we were treated to two nights of fireworks on the Lake, both Sunday and Monday. The level of the lake was really low, so I’m so glad to hear the level is back to pre-drought levels after all our rain this year.

Near the end of July my daughter Katie flew out from Michigan to visit for a baby shower—for her---with friends. Then we took all the family to Catalina for the day and rented two cabanas at Descanso Beach club. What a blast! All 14 of us!

August saw us attending the Pirate and Wench party at the Yacht club. They love dress-up parties.
Then at the end of the month we went camping to our favorite place, El Capitan State Beach north of Santa Barbara. Steve loves to paint while we are there…and I just relax.

There have been lots of weddings and Birthday celebrations in between and around.

The BIG news…I flew to Ann Arbor for the birth of my granddaughter in September. It was very exciting!

I stayed for two weeks to act as maid, cook and general bottle washer (for real) and was so sad to leave. The kids have been out to visit a couple of times, including an extended stay over the holidays.

We rang in the New Year at the Yacht club, and by early January were on our way to Florida to watch my one and only SISTER Katie tie the knot with her beloved Luke.
They are living between their homes in Florida and northern Michigan, and loving retired life. Their new home in Florida is gorgeous!

Here we are on the Coast at Sunset after the ceremony. We had a lovely dinner at Roy's to celebrate.

We spent the weekend in Dallas before heading to Florida and did all the “right” cultural things…a visit to the Fort Worth Kimball museum for the Monet exhibit; then to the Stock Exchange to watch them bringing the cows home, and a visit to the Perot Science museum in Dallas. That is a MUST SEE! Very impressive! All in all, we were very smart afterwards!

That’s all for now. We’ve lost more friends the past year, it just gets harder. I guess that is part of growing older. You take the bad with the good.