Owner Occupied Principal Residence – Part 2 of 2

This is Part 2 of Owner Occupied Loans. In this writing I will feature several of the legal aspects of this all-important Program.
If you missed reading Part 1, click here!

The purpose of this article is to encourage investors to continue to make these loans, in spite of the rumors that exist surrounding them.

I will start off this article the same as the beginning of Part 1, by saying that I will always offer loans to homeowners that are owner occupants. It is an important segment of lending and a heck of a niche for my office. I will say that the feds have brought about a lot of regulatory protections for this class of Borrower, but that is simply because they have determined home ownership to be such an important right and should be protected. It’s kind of like car seats for kids, seat belts, speed limits, food labels, movie ratings, warning labels on medications, etc., etc.

I will also tell you that there has not been a foreclosure of an owner occupied loan originated by my office (that I am aware of) in the last 6 years. This is key.

There are really just 2 quasi-objectionable regulations that apply to owner occupied transactions.

  1. The loans can be rescinded for up to several years if the correct disclosures were not made at the beginning of the loan. Rescinding a loan means that the Borrower gives back the principal and the investor (and the Broker) give back the interest and the fees. I asked our attorney about the incidence of this and he had no answer. I have never heard of it happening. I have also done tons of research on line on the subject and cannot find case law that applies. That is proof that, while there is lots of regulation, the occurrence of legal problems with these loans must be minimal as I cannot find anything on the subject.
  2. These loans take longer to foreclose upon. As these loans are required to be serviced, this is a servicing question. The regulation requires you wait 120 days to begin the foreclosure process. Then it’s just the regular foreclosure timing. From my experience, most investors would wait this long at least. Add to that the fact that we have not had a residential foreclosure (that I am aware of) in the last 6 years and it really is much ado about nothing.

So, statistically, owner occupied loans don’t get foreclosed upon in any significant number (zero in my office), Borrowers do not rescind the loans in any significant numbers (I cannot find any mention of it on line), the loan to values are good, they have an ability to repay the loan, they have an exit strategy, they pay the property taxes and insurance monthly, they do a consumer credit counseling class and the properties will likely appreciate in the coming months and years.

So if you hear mention of avoiding these loans, show whomever has said it these articles. These loans are important and a very good investment.

Read the full article at: http://www.sunpacificmortgage.com/blogs/owner-occupied-principal-re...

Best, Ken & Forest – The Guys in the White Hats

Lead Loan Originator and Hard Money Broker of family owned and operated Sun Pacific Mortgage & Real Estate, serving all of California since 1988!  707-523-2099 www.sunpacificmortgage.com.  CA DRE license #01464899 and NMLS #360993

 

Note:  Get our financing despite bad credit, difficult to prove income, property a fixer, etc.!  We finance Jumbo loans, Bridge and short-term loans, Owner Occupied purchases and refinances, investment purchases and commercial.

Forest CA DRE license #01000559 and NMLS #289456

Ken CA DRE license #01858042 and NMLS #1221130

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Comment by Forest Tardibuono on May 31, 2018 at 10:48am

Thanks for your inquiry Kevin, We are only licensed for the state of California and we don't service our loans either.  We are a broker for California hard money loans only. I hope that helps.

Best, Forest – The Guy in the White Hat

Comment by Kevin Palmer on May 30, 2018 at 9:44am

I would like to inquire are your loans serviced nationwide or just in CA?

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