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Lenders In Search Of Qualified Borrowers!

Originally Posted: August 01, 2011

John A. Viteritti

"In New York State, it would take lenders 62 years at their current pace to repossess the 213,000 houses now in severe default or foreclosure.: (Courtesy Photo: (themillerrealtygroup.com)

Southampton - As a follow-up to my recent article, "Reverse Mortgages in Reverse," I spoke with Christopher A. Minardi, Managing Director of Manhattan Mortgage for his experiences with the current mortgage market.

Capital One Bank in Southold has been promoting their intention to become aggressively involved in the home mortgage market, while at the same time, LPS Applied Analytics referred to in a New York Times article as a "prominent real estate data firm," reports. "In New York State, it would take lenders 62 years at their current pace to repossess the 213,000 houses now in severe default or foreclosure."

Christopher A. Minardi, Managing Director of Manhattan Mortgage. (Courtesy Photo: Christopher Minardi)

It raised the question in my mind, why would a lender choose to become involved in taking on home mortgages under these conditions? (Neither Capital One Bank nor Wells Fargo would consent to an interview).

Chris's reply: "I can't speak for either of these lenders. As for me, I'm happily busy with million dollar second-home refinances and new-home purchases. This year so far looks stronger than 2010, 2009, 2008, and 2007 - 2006 was my best year."

What do you attribute that to, Chris? His response "I'm very good at what I do. If you have a qualified borrower it is not hard to find a lender who will loan you the money. "

What is considered a "qualified borrower," Chris?

"The income to debt ratio has to be under 40 percent, and the borrower has to be able to put 20 percent down for loans $1 million or under, less for purchases over $1 million."

Chris continued: "What most lenders are looking to do is to package the loan and sell in to Fannie Mae or Freddie Mac and then continue to service the loan.
They are not looking to keep them in their own portfolios."

Author's Note: Fannie Mae and Freddie Mac will buy loans, in some areas of the country including the New York Metropolitan area, up to $729,750, at least through September, 2011, at which time, that may change. Loans over that amount are considered "Jumbo Loans" and cannot be sold to Fannie and Freddie.

Chris, what percentage of your loans are refinances and what percentage are new mortgages?

"It breaks down just about 50-50."

How many loans do you typically do in a year, and how many are "Jumbo," (non-conforming), and how many meet Fannie and Freddie guidelines, (conforming), I asked?

His response: "I do about 50 to 60 loans a year, of which about 55% are Jumbo and 45 percent Conforming."

How do most of your clients come to you, Chris?

"All of my clients are referrals," he answered.

Are they all local to the Hamptons?

"No. About 50 percent are in East Hampton, 35 percent anywhere from Southampton, and up-west through Suffolk and Nassau Counties; even in Westchester County where I have friends. The remaining 15 percent are co-ops in Manhattan."

That's a whole different ball game, isn't it Chris, dealing with co-op boards and the stringent lending requirements that lenders have for co-op loans?

"Yes, it most certainly is, John. As a mortgage broker, not only do I have to qualify the borrower, but I also have to qualify the co-op."

That would make for another interesting discussion.

How is your lovely wife, Sarah doing with Saunders, Chris?

"She had a great Spring. We are just hoping we continue to do as well as we have been."

Thanks Chris. Please give Sarah my regards.

Editor's Note: John will be teaching a 22.5 hours Real Estate Continuing Education class at Long Island University in Riverhead on August 15, August 17, and August 19. For information and registration contact Rosemary Malone at 631-287-8334 or by email at rosemary.malone@liu.edu.

John is a St. John's University graduate, licensed Real Estate broker, lecturer, teaches real estate license classes at LIU, NYU, and Cook Maran Real Estate School, and is a well-respected consultant to the real estate industry. www.johnaviteritti.com

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