Apr 14, 2014

Frankly My Dear I Don’t Give A Damn If You Got an Extension

The response I will hear from many borrowers when asking for these tax returns is that they filed an extension, and therefore don’t have to provide any paperwork regarding income in 2013.  In the immortal words of Clark Gable, underwriting will ask me to convey the most famous line in cinema to said borrower:


Frankly My Dear I Don’t Give A Damn If You Got an Extension


Here is what is required of borrowers wanting to get a loan after April 15th 2014.


  • 2013 tax returns E-filed and verified –  Underwriting can use a copy of the client’s 2013 tax return for a pre-qualification and a formal loan approval. HOWEVER, before we can release loan docs, all lenders must receive verification from the IRS (via a form 4506T) that the 2013 returns have been filed and accepted.  This process can take between two days and two months (depending on the volume of returns received by the IRS).  If our buyer’s tax professional didn’t e-file until the last minute, and we cannot verify the 4506T results (aka returns properly filed) – then we may have delays in closing escrow.
  • In person filing is OK –   For clients that either haven’t filed their taxes and need an immediate loan approval -OR- for clients who don’t want to risk delays with e-filing and obtaining 4506T results – we do allow clients to file their returns in person.  A client can go to the local IRS office in downtown LA, file in person, have page one of the tax returns date-stamped and we will use this stamped copy in lieu of proper receipt of the form 4506T.  PLEASE have your client call me if he is considering this strategy. 
  • If 2013 taxes won’t be filed until October –  If a client absolutely cannot file his taxes until later this year, but still needs to close escrow, we will need a possible combination of W2s, 1099s, profit and loss statements, proof of extension filing, proof of estimated taxes paid and/or a letter from the tax      preparer.  It’s not an ideal situation; however, if your client cannot file taxes for whatever reason, we have some commonsense solutions.  That being said, underwriting will need extra verification of income for 2013 & 2014, and will tend to make the loan a bit harder to obtain.
  • 2013 tax bill must be paid -  If taxes are filed, any taxes due must be paid.  If an extension is filed, any estimated taxes must be paid.  If taxes have NOT been paid, a formal payment plan with the IRS must be set-up and verified AND this monthly back-tax payment must count against the borrowers debt ratios.

For any questions about the above, please call Scott Groves at (818) 679-5188

Apr 1, 2014

Income Coming From Multiple Scources – We Can Do That


The Groves Lending Team and TRG Real-estate Group (more affectionately known as The Rental Girl)  just closed escrow on this beautiful condo.  

The deal wasn’t without it’s challenges as the buyer had a unique corporate income structure.  We here at the Groves Lending Team are experts when it come to the finding additional income for self-employed borrowers.  Many lenders feel that income analysis is one-dimensional and stop at an entry level evaluation.  Our team loves to dig into multiple years of tax returns to try to find more provable income.   By working closely with our underwriters we are able to find interesting ways to add back income. Thanks to our advanced analysis of this borrowers income, we were able to approve a loan that other lenders may have declined.

The team was lucky to be working with a top notch Realtor on this deal who encouraged her client to provide us with all financial documentation up front.   Elizabeth McDonald at TRG Realty is not just the premiere ‘rental girl’ in the area – she’s also a great Realtor who can help you buy or sell a home. This deal would not have gone through nearly as smoothly without her help. If you or someone you know is looking for a multi-unit home or a condo in the Los Feliz area, the team highly recommends Elizabeth McDonald who can be contacted at (323) 913-1443 or at liz@trgrealtycompany.com

If you or your client has a question about getting approved with corporate tax returns – call Scott Groves at (818) 679-5188.

Apr 1, 2014

Three Things More Important Than Rate

A friend of mine is a graphic artist who owns a very successful firm.  He likes to tell his clients “you can have your project done the best, the fastest and the cheapest – now pick two out of the three and let’s get started”.

Sometimes I feel like telling our buyers the same thing :-)

The truth is that in 2008 the Federal Government more-or-less took over the mortgage industry and leveled the playing field.  From day-to-day, depending on when each lender comes out with their pricing sheets and how they like to advertise their rates, the markets are pretty homogenized.  Rates from me or the next guy are going to be about the same.  That’s why we have focused on a building a team and aligning ourselves with a company who can get the deal done on-time, every time with 0% fall-out.  The rates kind of take care of themselves.

That being said, there will always be a better rate out there if your client wants to endlessly shop around.   Maybe Southwest Federal Credit Union of North Dakota is advertising an unbeatable rate on BankRate.com because they are making a strategic decision to try to expand to a different market.  Maybe B of A or Chase, in an attempt to make up for lost deals, is discounting rates by 0.25% to try to lure in new clients who may otherwise be reluctant to go with a big bank due to a complicated financial situation.   Maybe Company “A” is smarter and hedges against upcoming financial risk better than Company “B”.  In this scenario, being prudent, makes Company “A” look like they have slightly higher rates for the time being versus Company “B”.  This was dramatically relevant three years ago when no one could figure out how MetLife mortgage was underpricing the market and gobbling up all the jumbo deals.   Turns out they were pricing incorrectly and went out of business shortly after cornering the jumbo market due to inappropriately pricing risk.

Who knows why, but there always seems to be a better deal out there somewhere.  All I know are two absolute truths.  Absolute Truth #1 - if there was a “best” company in the market-place with the “best” rates all the time – I would work for them and within a couple years there would only be one mortgage company in the united states.  Absolute Truth #2 - I get it, I’m a consumer, I like to ask about “price” just like the next guy.  However, there are three things that are significantly more important than rate when it comes to obtaining a home loan.  Here they are:

  • Closing the deal is all that  should matter to the buyer and the Realtor –  If I offered the absolute lowest rates in town, but let about 30% of my deals fall-out or get declined mid-escrow (which is the most current stats available for the big three banks) – I would be out of business very quickly.  Movement Mortgage and The Groves Lending Team – through our up-front underwriting process, ENSURES your deal will not fall out of escrow due to a loan problem.  If we issue your client a commitment to lend, we are going to close that deal.  Consider us an insurance policy for your commission check :-)
  • Go with a lender you trust, NOT necessarily the lender quoting the best rate-Not all rate quotes are created equally.  Throughout my career I’ve seen every trick in the book used by lenders in order to appear to have the “lowest” rate.  Quote a low rate, but charge points.   Don’t charge “points” but charge “discount fees” and “lender fees” to get the rate down.  Quote rates on a “closing cost worksheet” instead of a Good Faith Estimate in order to not be held to the rate quoted.   And… my all time favorite used by several broker I know – Quote low, don’t lock in, pray the market drifts down within a 30 day escrow and then lock the rate – hope to look like a winner - come up with great excuse about why the rate wasn’t locked if the market drifts upward.
  • The job description of a great loan officer has changed –  Five years ago, a great loan officer had to know how to do loans.  Today, a great loan officer has to know how to do loans, have a great support team to get those loans approved up-front, know the local Realtors and be an advocate for getting their deals accepted.  I have at least 25 appointments a month with new Realtors (coffees, lunches, co-hosting open houses, charitable events and mixers).  If you’re working with a lender who cannot pick up the phone and  talk to the listing agent on a personal level to help get your client’s deal accepted – you might be using the wrong lender.

Feel free to give us a call if you have any questions about the above or if  your client needs to get pre-approved.

Mar 5, 2014

2013 Taxes


I post this every year as it is of the utmost importance regarding filling taxes and buying a home.

As we approach April 15th, I promise that at least one of your clients is going to finalize their tax returns without consulting their lender – potentially changing your client’s pre-approval into a declined loan. The manner in which our client files, change deductions, or opens / closes a business entity – can dramatically affect his or her loan approval.

If at all possible, PLEASE have your clients review his or her taxes with me or their lender of choice before they finalize their returns.

It’s also important to know that the IRS has been slow this year to upload results from taxes that are E-filed.  On every file, every lender is going to send in a form 4506T to the IRS to verify relevant information on filed returns.  Unfortunately, if these results are not available due to IRS delays, it can hold up the close of your escrow as lenders wait on confirmation from the IRS.

If your client is counting on 2013 taxes to help qualify for a loan, and they haven’t yet E-filed, I highly recommend filing in person whereas the IRS can stamp the returns as “filed”.  This date stamp can be used in-lieu of the standard 4506T results.

Our local IRS office can be found downtown:

300 N Los Angeles St  Los Angeles, CA 90012
(213) 576-3009

Please don’t hesitate to call Scott Groves at (818) 679-5188  with any questions you or your client may have about their 2013 taxes.

Mar 5, 2014

FHA High Balance Duplex – We Can Do That


The team just closed on this awesome duplex in Highland Park. The first time homebuyers were able to do a high balance FHA loan. Because the loan was high balance and the property was a duplex the FHA required a down payment of 10%.

The team is used to closing very difficult loans that no other lender can close and this was one of those loans. The sale was a probate with multiple issues with title that had to be cleaned up. Also the units were to be delivered vacant, which caused a problem with the current tenants. With the help of Paulina Martignon over at M.T. Evictions we were able to get the tenants out and the units vacant.

As first time homebuyers, people tend to get scarred by the littlest occurrence through the escrow process. With dealing with title issues and evictions, one can imagine how freaked out our buyers could have been. Because of the amazing work of the buyers agent Henry Plascencia the borrowers never saw the monsters in the closet and were well informed throughout the way.

For anyone looking for realtor in the Highland Park or the surrounding areas, Henry Plascencia over at Berkshire Hathaway Home Services in Los Feliz is your go to man. Henry can be reached at (323) 255-4975 or at WorkWithHenry@gmail.com.

If you ever are in need of an eviction specialist, the team highly recommends Paulina Martignon who can be reached at (323) 697-3077 or at mtevictions@gmail.com.

For all questions regarding high balance FHA loans, feel free to call Scott Groves at (818) 679-5188.


Mar 5, 2014

10% Down With No Private Mortgage Insurance (PMI) – You Know We Can Do That


The team just closed another  loan with an 80-10-10 loan. By doing so we were able to save the buyers from having to pay mortgage insurance. How it works is that if you are interested in property with less than 20% down – our team has the solution. Many lenders, in this environment, are still scared to use common sense underwriting when it comes to second mortgages. Our company is at the forefront of bringing this program back to the market. By having an 80% 1st mortgage, a 10% 2nd mortgage and 10% down (from the buyer) – we can create a loan package where we avoid cost mortgage insurance premiums all together.

Luckily the buyers amazing agent Gillian Abercrombie Frame at Coldwell Banker in La Canada was able to get the team in touch with the buyers early on. By doing this we were able to help pick the perfect loan product for the borrowers. Gillian was amazing throughout the process helping to keep her buyers well informed and in helping us with escrow items.

If you are looking for a realtor in the Pasadena/La Canada areas, Gillian is your go to person for all of your real estate need. She can be contact at (818) 949-5712 or at gillan@coldwellbanker.com.

For all of your questions regarding 80-10-10 loans please feel free to contact Scott Groves at (818) 679-5188.

Mar 5, 2014

Want To Purchase A Home With Credit Errors – We Can Do That


Contrary to popular belief, just because someone has credit errors does not mean the end of the world when buying a home. We worked with the buyers of this home for over a year to get everything in place for them. It all started with getting credit scores up. The team was able to work with the borrowers and were able to get a credit re-score. Once everything was in place it was a matter of finding the perfect home.

Cherryl Weaver was truly amazing throughout this transaction. She was able to hold the deal and the borrowers together through the escrow. There were complicated repairs that needed to be negotiated and Cherryl was able to get it done when most other realtors would have given up. This escrow had a lot of moving part and between the work of Cherryl getting things done on the buyers side and the team doing everything they can, we were able to get the loan closed.

For anyone looking for a realtor that will truly go to the mat for you in the Mt. Washington/Highland Park area the team highly recommend Cherryl Weaver at Re/Max Tri-City. Cherryl can be reached at (323) 254-1350 or at cweaver533@gmail.com.

For any questions about credit and home buying please call Scott Groves at (818) 679-5188.

Mar 5, 2014

First Time Home Buyers That Need More Attention – We Can Do That


We here at the Groves Lending Team do not understand why some lenders refuse to work with first time homebuyers. We love working with first time homebuyers because it reminds us all the reason we all got into this industry.

From our first meeting we were able to help coach the borrowers on the steps they needed to take in order to qualify for the house of their dreams. Besides coaching, we were able to restructure the loan so that much to the relief of the borrowers, we would not need any co-signers. For everything we were able to do to help the borrowers buy their first home, the amazing Liz Johnson was able to do the same on her end. Liz made the escrow process extremely low stress for the borrowers and easier for us on the loan end. Due to the amazing partnership between Liz and the team, everyone involved with this transaction was extremely happy. More importantly, the first time homebuyers had a low stress first home purchase that left them happy about the whole home buying process.

If you are looking for a home from Pasadena to Cypress Park, Liz Johnson is truly the agent to call. Liz can be reached at (323) 225-4529 or liz.johnson@telesproperties.com

If you are a first time homebuyer or have clients that are first time homebuyer, please call Scott Groves at (818) 679-5188.


Mar 5, 2014

Need To Sell A Loan Directly To Freddie Mac – We Can Do That


There are a few occasions where a loan must be sold directly to Freddie Mac. The most common reasons are that the debt to income ratio is higher than the Fannie Mae  limit of 45% or if there is a non-occupant co-borrower. As this all sounds like an easy thing to do, but most lenders are unable to sell loans directly to Freddie Mac which means they are unable to do these types of loans.

Not only were we able to close this loan, because we sell directly to Freddie Mac, but the team was able to close it on time. With the help of Alison Gilbert at Berkshire Hathaway Home Services  in Los Feliz helping us to keep the borrower informed every step of the way, this deal would not have been nearly as smooth.

If you are looking to buy a home in the Burbank or the surrounding areas and want a rock solid agent that will help make the process smooth, the team highly recommends Alison Gilbert who can be reached at (323) 369-3464 or at Alison.Gilbert@gmail.com.

If you have any questions about Freddie Mac loans, contact Scott Groves @ 818-679-5188.

Feb 18, 2014

It’s not you, it’s me – Delays In The Loan Process

Who can forget this classic Seinfeld episode… “It’s Not You, It’s Me”.   Often, when a deal is delayed or things go sideways with the financing it’s the lender’s fault.  However, sometimes delays are caused by the Realtor or the client.  Here are the most common delays where it is actually you, not me :-)

 Seinfeld – It’s Not You It’s Me

  • Home Owner’s Insurance –   More and more lenders are moving toward requiring borrowers to have a full insurance binder (not just a quote) in place to release loan documents.  Frequently quotes change, and lenders are stuck scrambling at the 11th hour in order to update the loan approval (due to a different insurance premium) and rework the impound numbers.  Get the full insurance binder in as early as possible to guarantee an on-time close.
  • Vesting and Statement of Information -    Frequently we are ready to go with loan docs pending updated title and escrow information. Unfortunately, title and escrow can only do their part once they get the vesting and fully completed statement of information back from the borrower.  This paperwork can be daunting and it is really helpful when agents take the time to review this paperwork with their buyers.  It speeds up the process and ensures we can get docs on time.
  • I.D. & Notary Challenges -  Married names, maiden names, AKAs, stage names – I’m shocked how many people don’t have a valid I.D. that properly matches their legal name – AKA the name that will  appear on the loan docs.  Without a valid I.D., notaries will often decline to notarize the loan documents and this can create delays.  If for any reason your client has mentioned a name variation or has recently married, please inform you loan officer right away.
  • Closing Cost Credits –  Although our team makes it a practice to review the estimated HUD-1 and buyer’s estimate one week before the close of escrow, sometimes things get overlooked.  With some frequency I’ve had docs out only to hear for the first time, from the Realtor or Escrow Officer, that the lender was never informed of a credit.  Lenders need to know about ALL seller credits as soon as possible.   If the total closing cost credit is going to exceed $5,000 the lender may      recommend splitting the credit between a closing cost reduction and a price reduction.  Closing cost credits generally need to be added to the appraisal report and the underwriting decision.  It’s imperative that any information about credits be conveyed to the lender via an escrow amendment immediately.

If you or your deal is getting delayed or if you have questions about the things that can delay a loan, please contact Scott at (818) 679-5188.


Scott Groves     |     Your Trusted Lender

Groves Lending Team

A Los Angeles based lending team specializing in conventional and FHA purchase mortgages. The Groves Lending team can manage the entire loan process providing clients with efficiency and accuracy.

818-290-8158 (7:00am-7:00pm)