This is a letter that the employees of WJB allegedly got today on Sunday, March 13, 2016. WJ Bradley is allegedly closed for good. Rumors have been circulating for months regarding the struggles of this company.

 All - 

W.J. Bradley Mortgage Capital LLC and certain affiliated companies (collectively, the "Company") have made a strategic decision to wind-down their businesses.  The Company will cease operations and stop funding new loans starting March 13, 2016.  

The Company is in the process of reaching out to its customers, vendors, employees and other key stakeholders to help them understand what this means to them and the proposed next steps.  

Concurrently to this message, the Company is issuing directives to its employees, reminding them of the Company’s Privacy Policy and of their obligation to preserve and protect customer and Company information.

The Company will immediately begin an orderly wind-down and secure data and collateral to the best of its ability in order to maximize value for its creditors and other stakeholders while minimizing liabilities and future claims. 

You should not work or come into the office on Monday, March 14, 2016 or on any other day unless you receive written instructions requesting that you work.  Unless otherwise informed, any work time invested on March 14, 2016 or beyond will be unpaid.  Wages earned through March 11, 2016, (and commissions earned through March 13, 2016) are being processed for payment.  For those employees paid by direct deposit, funds should appear in your account via ACH as early as Tuesday.  Employees paid with manual checks should receive those checks by overnight delivery to your home as early as Tuesday.  

While the Company is ceasing operations and winding down, it remains subject to the licensing laws of each state in which it operates and to the requirements of the agencies that regulate its business, including the Consumer Financial Protection Bureau.  This means that you must continue to comply with your obligations to the Company and its customers in the same manner and to the same extent as if the wind down was not occurring.  Your NMLS record will continue to reflect the Company as your employer until changed by you. If our borrowers request that their loan application be transferred another lender, you must obtain the borrower’s prior written authorization to do so.

In an effort to minimize impact to current loan applicants, the attached Transfer Authorization letter can be sent to your customers who wish to request a transfer of their W.J. Bradley Loan Application file to a new lender. The Company must have signed authorization from a borrower prior to transferring data or personal, non-public information. Please inform your customers interested in transferring a loan application to a new lender that a signed copy of the Transfer Authorization letter must be sent to [email protected]. Upon receipt, the customer will receive an approval response from an authorized Company party acknowledging the request for transfer.

Effective immediately, you must get approval from an officer of the Company to spend, purchase, create a new purchase order, enter into a contract, agree to a sub-contract, charge a credit card transaction or commit the company to any liability in any amount from today until further notice.  You must also receive approval from an officer to make any commitments from a consumer or receive any deposits from a borrower. This includes both one-time and recurring expenses, as well as travel and entertainment expenses that you would charge in through the expense reporting process.  Please note that if you have received prior budget approval for an expense, you must obtain a new approval before you incur the cost. 

Should you have questions, please direct them to [email protected].  Expect additional communications within 24 hours. 

2015 has been a banner year for the banks in terms of Jumbo lending. Most jumbo loan amounts begin when Fannie and Freddie limit their loans at $417,000. However on California, many counties offer conforming loans up to $625,000. This used to be considered a benefit because Fannie Mae loans offered lower rates than Jumbo loans. This is no longer true and you can find jumbo loans on a 30 year fixed for as .25% lower than the conforming rate.

It seems that some retail regional lenders are beating the major banks on rate as well. A recent survey by Checkrates.com in the bay area compared the rates of Wells Fargo, Bank of America, Citimortgage, and Chase to a few smaller lenders like Parkside lending consistently beat the major banks by .125% to .25% on many days.

As Fannie Mae and Freddie continue to increase fees, while the MBS market is continuing to pay generous spreads to the non-conforming loans, we expect the “Jumbo rate advantage” to continue for years to come.    

Checkrates.com is devoted to helping people buy homes. When done correctly, you will have the home of your dreams and a budget that makes it easy to enjoy your life. Selecting the right lender and Realtor is really important. In fact, we believe that you should have a lender and a loan approved before you go home shopping. If this philosophy makes the most sense to you then here are the steps you should take in the months before you buy a home.

1. Get a copy of your credit report and correct any errors. Everything starts with your credit report; How your loan is priced, what kind of loan you qualify for and whether you can buy a home at all. 

2. Reduce your debt. Pay down card balances to less than 50% of the limit. If you can pay them down to less than 30% of the limit, even better. Old collection account from that cable company? Pay it now. If you find yourself with medical collections, wait until you speak with a lender about paying those off because some programs allow medical collections to remain outstanding. As a general rule, prioritize to pay down those cards with the highest interest rates first.

3. Find a lender and determine how much you can afford to pay for a home. Decide how much you are willing to spend for a home. Both in terms of down payment and monthly payments. You can use the FHA for 3.5% down loans, Conventional for 5-20% down loans, or the VA (if you are eligible) for 0% down loans. You're going to need more than this for moving costs, utilities sign up costs, and reserve fund. 
 
4. Read up and learn basic mortgage terms. Read the FAQ's on checkrates.com

5. Get pre-approved for a mortgage loan. This usually entails a loan application with a mortgage company which should not take more than 30 minutes. They will pull your credit and examine your income and asset accounts. Usually you will need to give them income and asset documents consisting of paystubs covering 30 days and you last two tax returns with all schedules and w-2 forms. As for the assets, you will have to provide statements covering 60 days from the accounts sufficient to cover your down payment. You will have to document all large deposits that are not payroll related. 

6. Research neighborhoods that you want to a house (drive & online, if you like something ask your Relator to show it to you) Crime, Schools, Activities, Sports, etc. should all be taken into account.

6. Hire a realtor by interviewing several of them who specialize in the neighborhoods you are interested in. Make sure they are full-time and reputable. Experience counts.  

7. Visit homes and keep a journal with pictures. Plan on doing this for a few months. This will help you learn the market so you know when the "deal" is in front of you. 

8. Once you find a house you like, have your real estate agent determine the price you should offer. Look at comparable houses the sold in the last 6 months. You will be spending for an appraisal and home inspections which will be around $1000, so make sure you are reasonably sure you want the home. 

9. Have real estate agent write the offer. Make it as strong as possible but don't overpay. Your Realtor should be very involved at this point.

10. Complete all mortgage loan application requirements. Get an insurance quote as this can uncover past insurance issues such as mold or roof problems. 

11. Hire a home inspector to examine the house & be there for the inspection. You will learn a lot about the house.

12. Get an agreement on repairs to be made by the Seller. Sometimes its best to have the big things done and overlook the small items.

13. Inspect the repairs, walk through the house and look for issues that you didn't see before. Ask the lender if the closing figures are completed. Make sure the funds will be available on closing day by ordering wire transfers early.

14. Wire the down payment, sign the mortgage and pick up the keys for your home. Don't forget the garage door opener!

15. Keep the closing papers for your tax preparer! They will need your settlement statement. 

1. The new interest rate must be lower than your existing rate. To make it worthwhile your new interest rate should be at least 1 % lower than your existing rate.
2. Under the IRRRL program, you cannot receive cash proceeds from the refinance. This means that if your existing mortgage is $90,000 you cannot tack on $20,000 from the home's equity for a remodeling project. However, you can add up to $6,000 for energy efficiency improvements.
3. You do not need to reapply for a Certificate of Eligibility. The lender can electronically receive confirmation from the VA.
4. The VA does not require an appraisal or credit check. However, your lender might require these documents.
5. If your current mortgage is an FHA or Conventional loan, you cannot refinance through the IRRRL program.
6. You cannot combine your existing mortgage and a second mortgage under the IRRRL program.
7. You don't need to pay any upfront fees. All refinancing costs can be built into the loan.
8. Contrary to popular belief, you do not need to refinance with the lender holding your existing mortgage. Any lender can provide you with an IRRRL.
9. Fees and terms vary among lenders and unfortunately some lenders prey upon Veterans. According to the VA, "Some lenders may say that VA requires certain closing costs to be charged and included in the loan. The only cost required by VA is a funding fee of one-half of one percent of the loan amount which may be paid in cash or included in the loan."

The market in 2014 is nowhere near as imperiled as it was during the housing bubble of 2006-2008. But Homebuilders may be overbuilt at the moment. Peter Schiff says, “If you remember, during the housing bubble instead of dropping prices, which would have been a sign of trouble, the builders started throwing in freebies,” Schiff explains. “Some of the developers were even throwing in brand new cars so they didn’t have to acknowledge prices were falling. Now they’re doing it all over again. Builders are loading up on incentives because they’re having a hard time selling their homes. This is really a precursor to falling prices.”

This is bad news for mortgage lenders such as Fannie Mae. They are in the business of making real estate loans and basing those off of market value. When builders offer furniture, cash rebates, and home theaters rather than dropping prices, it distorts the equity in each loan which can quickly evaporate if the home were to default. Lender have taken steps to prevent this sort of fraud prior to underwriting but the builder s will usually find ways to push the rules.

The SPDR S&P Homebuilders ETF (XLB) has been performing miserably in 2014, many think that builders pulled the trigger on too many homes based on the strong sales figures from 2013 on re-sales. But these were heavily skewed by all the investor buyers that have since evaporated from the market. In many markets demand is still strong such as Denver and Dallas. But the vast majority of markets are seeing weakness on new home sales in the second half of 2014.

2014 Homebuilder performance

If you are applying for a mortgage and the lender calls you with the news that you must file your most recent tax return before you can close, then you must file it. Even though this is incredibly frustrating and may result in being homeless while the IRS processes your tax return, it must be done and most loan officers will tell you this is a major cause of delayed closings. It is crucial that you E-file if you need the loan quickly. Mailing in your returns can take up to 8 weeks. E-filing takes a matter of days. Your lender will be sending a form 4506T to the IRS to verify the income you are submitting to them matches the records with the IRS. 

Let's take a look at the most common reasons filing your tax return will be required: 

You need the income to qualify

Lenders need a two year average of income and if they need your most recent return filed, it is likely because the years prior to that had lower income which will bring down your average

You have un-reimbursed business expenses

This could leave open the possibility that there is more to the story regarding your income than your simple W-2 forms.

You have a business that is either a sole-proprietor or you have corporate/partnership income

If you are making $100,00 per year at your job but you also own a business that loses money every year, the underwriter MUST document that to prove you are not losing money every month as a business owner. This is used to calculate your income average whether that is good or bad is a matter of how well your business did in the prior year.

You have rental property

Too often what is on the lease is at odds with what is reported on the tax return so the underwriters have 'tightened up' on rental income by requiring the actual net income used on your Schedule E.

 So if you are thinking about buying a home and you file a tax return other than 1040EZ, then have your taxes filed a few weeks before your application. For more information about E-filing, visit the IRS at  http://www.irs.gov/Filing. One final tip: When filing tax and applying for a mortgage, keep your name straight by using your name exactly as it appears on your social security card. Make sure you do this when you file taxes, apply for your mortgage, open your bank account, and on all of your pay documents from your employer. Before you apply for a mortgage would be a great time to make the corrections. Otherwise, you can expect a lot of explanations to the lender, court papers, etc.  

This depends on whether or not the property is located in a flood zone as defined by FEMA. During the loan process the lender must insure that your property is not located in a 'Special Flood Hazard Area' or SHFA.

The VA guidelines are clear on this  - You need flood insurance if you are in a flood zone

“The lender is responsible for ensuring that flood insurance is obtained and maintained on any building or personal property that secures a VA loan if the property is located in a special flood hazard area (SFHA), as identified by the Federal Emergency Management Agency (FEMA).”

So how does a lender determine this? By ordering a 'flood cert' from any number of vendors with access to FEMA maps. Your lender will do this for you. For a small charge of around $20 (paid when you close), the lender can determine the danger of a home flooding almost anywhere in the country and this information is used to determine the insurance premium.

You can obtain flood insurance through the National Flood Insurance Program (https://www.floodsmart.gov/floodsmart/pages/choose_your_policy/agent_locator.jsp) by visiting their site, entering your zip code, and selecting an agent. They will send you a quote within minutes and you will be covered!

Flood insurance is required to protect you and the lender.

Bill Ackman of Pershing Square Capital Management LP is suing the Federal Government because he feels cheated by the treasury. Cry us a river Bill. During the financial crisis of 2008, Fannie Mae and other agencies were declared insolvent and required a government bailout of $185 Billion from the taxpayer. The terms of the emergency bailout were hammered out and Fannie Mae and other agencies in exchange for being saved were to pay a dividend to the Treasury of 10% for the $185 billion infusion.  Fannie Mae has been able to pay this dividend and has paid in excess of $185 Billion to date.  Bill Ackman thinks Fannie Mae has paid enough and insists that the dividend is unlawful and the $185 billion should be treated as an interest-free loan rather than a dividend-for-capital infusion. By getting a court to classify the government investment as an interest-free loan, Mr. Ackerman hopes to claim that the legacy shareholders, rather than the government are entitled to the massive profits. The problem with this position is that the legacy shareholders voted for the legacy management that resulted in the insolvency of Fannie Mae. We all know that under a traditional public business model the shareholders of an insolvent company with debt are entitled to nothing. This is finance 101 and Mr. Ackerman knows this.  Even he can see the irony of using our political system to unlock the vault of Fannie Mae again. But this time, rather than bribing congress, he is taking to the courts. And this is the problem with Fannie Mae, on some level everyone feels entitled to a shot at these massive profits and they will turn to all levels of their crony government to help themselves be declared the winner.        

Bill Ackman's case is perched on thin ice because it doesn't respect the basic rules of American business; In the case of insolvency, equity is always subordinate to debt. And new capital and equity is senior to old equity that was recklessly lost. This is how to incentivize good management. Had Bill, or the shareholders, or the debt holders showed up in 2008 with their own infusion of $185 billion to save the GSE's then it is reasonably certain he would have been given the same deal. Moreover, the time for Bill to get involved was prior to 2008. Was he suing the radical management practices of Fannie Mae in the 2000's when they were being abused by his wall street cronies? Was he protesting the egregious CEO bonuses being paid?  He wasn't. Nor was Bill Ackman there in 2008 with the $185 Billion needed to save our home loan banks.  Neither were any of the shareholders or the bondholders. Nobody was there for Fannie Mae except the taxpayer. So the government stepped in and took the massive financial and political risk. And now the taxpayers are entitled to the dividend.  That was the deal. Period. Mr. Ackerman was not suing the treasury back in 2008 for a chance to counter offer the $185 billion at 10% dividend with his own money. He waited to see what would happen and when the coast was clear he furiously began the hunt for any flimsy legal issue he could raise.     

The biggest issue that the business community should take note of is that the government is running Fannie Mae a lot better than private sector did. I have no doubt that the efficiencies of the private sector could help Fannie in some ways, but any gain in efficiency would be lost by the inevitable corruption that the private sector will bring to the agency. The temptation for lenders to make huge fees, game the system and dump all their bad loans on Fannie Mae is just too great to ever let these self-dealing jackals have it back. The shareholder-owners had their chance to run Fannie Mae and they failed miserably so they lost the company. And the government saved it. 

As an originator, I never want another mortgage crisis.  It was bad enough to watch my business, retirement and savings accounts dwindle while the housing industry burned to the ground. It was a life-changing experience to see the effects of corruption on some of my clients who lost their homes. Worse, there were the clients who did everything right and couldn't sell their home, build a new home, or get a loan at all because the market was seized. And the one thing I'm never going to do is listen to something that I know is a lie without calling it out. Ackman is just wrong. The private sector will not run it better. The shareholders already lost their rights to the company, the government was clear about the terms of their involvement and they are not entitled to any of the future profit of Fannie Mae. He was given notice of the terms of the agreement so any hope of Ackman getting to those profits is a pipedream. And for that reason I hope he swiftly loses his case and Fannie Mae stays in the status quo. Our National mortgage bank is not broken anymore thanks to our government intervention which has been in no uncertain terms, terrific.