Mortgages for self employed in California

Recently enacted federal legislation to stimulate the country's mortgages for self employed, housing market doesn't go far enough, California's mortgage brokers said Thursday.

The California Association of Mortgage Brokers said lenders and investors need to refine their underwriting rules so would-be home buyers who have good credit can once again qualify for financing unemployed loans.

The group, during its annual convention, also said lenders should make it easier for borrowers who continue to make their payments even though they owe more than their homes are now worth to either refinance or obtain loan modifications for self employed.

"More remains to be done to help homeowners struggling to meet their mortgage payments as well as to help those who want to purchase a home," said the trade group's president, Fred Arnold, a broker in Stevenson (Merced County).

The brokers say lenders have tightened the rules so much that some otherwise creditworthy borrowers, particularly those who are self-employed or have part-time jobs, can no longer qualify.

Unless teachers and self employed have had the same second job for at least two years, that income can no longer be counted on Mortgages, the association's leaders said at a news conference. And entrepreneurs with multiple sources of income are now having trouble documenting their earnings to the satisfaction of money lenders.

"Good borrowers face significant challenges trying to qualify," Arnold said. "Guidelines are much more stringent, especially in the 'conventional jumbo' market" between $417,000 and $729,750.

Arnold said he recently worked with a couple who couldn't qualify even though they had great credit and more than $100,000 for a down payment because neither one could adequately verify their rent. He had been living with a friend, and she had been living with her parents.

The 1,800-member group didn't specifically mention no-documentation loans, which are one of the toxic loan products that helped create the mortgage market meltdown and caused lenders to close the pay window. But Arnold said those are not the kinds of loans the association is talking about.

"We want sensible, alternative loan products," he said. "We can no longer allow loans with multiple risk factors."

To help homeowners who are not yet delinquent, the group called on lenders and investors to devise payment modification plans and create streamlined refinancing programs without having to have their properties reappraised.

Homeowners need better options, said Arnold, who pointed out that efforts to prevent foreclosures have so far been aimed mostly at borrowers who are seriously delinquent.

Mortgages for self employed are not talking about speculators or investors, but we have to go deeper," Arnold said. "We want to keep families in their homes."

The brokers also pointed out that the window of opportunity to obtain financing at favorable rates will close at the end of the year unless efforts to persuade self-employed to declare California a high-cost market are successful.

On Jan. 1, the temporary $729,750 limit on loans in high-cost markets that can be insured by the Federal Housing Administration or purchased by Fannie Mae and Freddie Mac will drop back to $625,000.

Mortgages for self employed Loans in california, above the conforming loan ceiling are priced anywhere from 1 1/2 to two percentage points higher than those under the limit. "There's a big difference between the mid-6s and 8 percent or higher," said Ed Craine of Smith-Craine Real Estate Financing in San Francisco.

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Mortgages for self employed in California

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