Construction-Perm Structuring

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khoiey

1583 Posts

Posted - 07/31/2008 : 05:23:43 AM

I found a couple of construction lenders willing to lend but they all have one condition. That is if I can find a permanent lender's commitment/approval. That would mean double closing costs for my clients. Would any lenders willing to give a commitment/approval prior seeing the property being built? What about the downpayment issue with the second lender? I have done c/p with a single lender before but not separately.

jillstatz

657 Posts

Posted - 07/31/2008 : 06:16:15 AM

Flagstar still has their one time close programs...give them a call or get in touch with Luke Allison on here about it.

JJS6866

30 Posts

Posted - 07/31/2008 : 06:50:26 AM

Flagstar will go to 85% LTV on a CTP. The underwriting isn't that bad but you have to work with Granite Loan Management for all of the construction stuff(getting the builder approved, draw schedules, etc)

M&T bank still does CTP and you can go to 95% LTV but good luck getting your file closed in under 90 days. I had 4 construction loans with 90% LTV or less, low DTI's, and 740+ credit scores. Last month ALL 4 loans were suspended because some jackass underwriter noticed that the deed to one of the files had a clause in about Subsidence for Coal mining...GUESS WHAT STUPID!!! almost every deed in the state of PA has that clause. To make a long story short we ended up going with a lender that is only financing the construction.

I think going back to the two time close is better because you can get your loan done in a timely manner and in 6 months you have a sweet(easy) end loan to do. If you can't get DU findings or something for the customer's end loan then you are out of luck and never would have got them done as a CTP anyway.

khoiey

1583 Posts

Posted - 07/31/2008 : 09:02:17 AM

The second you would structure it as a refi?

quote:
Originally posted by JJS6866

Flagstar will go to 85% LTV on a CTP. The underwriting isn't that bad but you have to work with Granite Loan Management for all of the construction stuff(getting the builder approved, draw schedules, etc)

M&T bank still does CTP and you can go to 95% LTV but good luck getting your file closed in under 90 days. I had 4 construction loans with 90% LTV or less, low DTI's, and 740+ credit scores. Last month ALL 4 loans were suspended because some jackass underwriter noticed that the deed to one of the files had a clause in about Subsidence for Coal mining...GUESS WHAT STUPID!!! almost every deed in the state of PA has that clause. To make a long story short we ended up going with a lender that is only financing the construction.

I think going back to the two time close is better because you can get your loan done in a timely manner and in 6 months you have a sweet(easy) end loan to do. If you can't get DU findings or something for the customer's end loan then you are out of luck and never would have got them done as a CTP anyway.

JJS6866

30 Posts

Posted - 07/31/2008 : 09:08:01 AM

Yeah just structure it as a RT refi with the construction loan being the mortgage that is getting paid off by the "end loan".

khoiey

1583 Posts

Posted - 07/31/2008 : 09:20:00 AM

If you separate the loan into two parts, then the clients would have to pay for double closing cost? One for purchase (construction) and other is refi.

quote:
Originally posted by JJS6866

Yeah just structure it as a RT refi with the construction loan being the mortgage that is getting paid off by the "end loan".

JJS6866

30 Posts

Posted - 07/31/2008 : 10:05:18 AM

Yeah they have to pay two sets of closings costs but they get their house built. You just have to sell them. If you want to trudge through getting a CTP done with MT bank that is going to give you **** about the fact that their house might fall into a coal mine...be my guest.

I tell my customers they will most likely get a better permanent interest rate doing the loan this way. I also let them know that they don't have to use me for end loan but if they do I won't charge a broker's fee and I'll do everything I can to keep their closing costs as low as possible.

I have just recently found that doing CTP loans is a HUGE pain the ass as all the wholesale lenders require an appraisal from a appraisal management co. and the area I do business in is pretty rural. I was getting crushed on appraisals and underwriting is a nightmare. So its either sell the customer on the two time close and potentially get two loans...or try and mess around with one of the lenders doing CTP and pull my hair out. MT needs 10 business to underwrite a construction to perm loan....and the stip sheet that I get is about 3 pages long....screw that.

I closed 5 construction loans in July and I have about 12-15 more to do over aug, sept, and oct...Those houses will be start to be finished in January and I'll have some slam dunk end loans to do while no one is selling any real estate. Out of all the apps I've taken from this builder I've lost maybe 3 or 4 loans to local banks...Those customers were all going to be a pain in my ass anyway so I'm glad. The best part is at least 2 customers that didn't want to do the two time close got turned down for the CTP at their local bank and now they are coming back to me.

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