HELOC Lending

Navigating the HELOC Maze: Aven Financial, Prosper Funding, Figure, and Fraction Compared

Choosing the right Home Equity Line of Credit (HELOC) provider can feel like navigating a labyrinth. To help you out, I compare four popular options in the lending arena: Aven Financial, Prosper Funding, Figure, and Fraction. Four newer online HELOC Lenders VS Huntington Bank or your Bank

Interest Rates:

• Aven Financial: Competitive rates, often with discounts for existing customers and automatic rate reductions based on on-time payments.
• Prosper Funding: Rates vary depending on creditworthiness, but can be competitive for borrowers with excellent credit (you need a 721 score).
• Figure: Offers a fixed-rate HELOC with no origination fees, potentially making it attractive for short-term borrowing.
• Fraction: Rates tend to be higher than competitors, but they offer unique features like flexible draw periods and interest-only payments.

Fees:

• Aven Financial: Origination fees and annual fees may apply, but can be waived under certain conditions.
• Prosper Funding: Origination fees and annual fees are common, and vary depending on loan amount and borrower profile.
• Figure: No origination fees or annual fees for their fixed-rate HELOC.
• Fraction: No origination fees, but an annual membership fee applies.

Application Process:

• Aven Financial: Traditional application process, requiring documentation and credit checks.
• Prosper Funding: Similar to Aven, with potentially slower processing times for larger loan amounts.
• Figure: Streamlined online application process, with faster approvals but potentially stricter credit requirements.
• Fraction: Fully online application with quick decisions, but may require property valuation and additional documentation.

Features and Benefits:

• Aven Financial: Offers various HELOC options, including lines for investment properties and lines with interest-only payments.
• Prosper Funding: Strong customer service and educational resources, but limited HELOC options.
• Figure: Fixed-rate HELOC offers predictability, but limited draw period and early closure penalties.
• Fraction: Flexible draw periods and interest-only options, but high membership fee and potentially higher rates.

Overall:

• Aven Financial: Good choice for borrowers seeking competitive rates, discounts, and multiple HELOC options.
• Prosper Funding: Best for borrowers with excellent credit who value customer service and education.
• Figure: Ideal for those seeking a fixed-rate HELOC and quick approvals, but be aware of limitations.
• Fraction: Worth considering for borrowers needing flexibility, but weigh the higher costs and potential rate disadvantage.

Remember general terms and conditions for second position HELOC:

A HELOC is second position.

1. borrower had to use title insurance and have/had a first and not changed the deed DIY since the title insurance was issued. This means you could not transfer to LLC after doing your conventional loan.

 2. Are full documentation with past two years IRS taxes net income. 

Personal, S Corp, LLC all the pages 2022 2021 right now and your 2023 profit and or loss or 1099 and w-2. The whole novel is uploaded.

3. FICO standard desired is 720 mortgage middle score/ some will go lower with low DTI 

4. HELOC is a computer program, borrower fits into the boxes, little to no exceptions. If you have tricky income do not apply to one of these online lenders. You need to go to a mortgage banker who can advise as to where or what shop will accept your personal financial profile. Do not apply at several places and wreck your FICO score as the score is vital to approval.

5. prime + 2 or 3 for owner (prime is 8.5 today) max 22% APR for owner occ is 11.011 APR non owner 13.441

 The cost is low to set up.

Often an automated digital appraisal ~ so the value isn't going to hit the highest range.

HELOC is variable rate like a credit card amortized over 15 years.

HELOC can be closed if value declines or credit declines...

BEFORE YOU APPLY LET'S TALK - call me  949 - 784- 9699

I won't pull your credit but will help.

 

BAAS 2023 Wild West

Banking as a Service: Wild West Bust?

The Banking as a Service (BaaS) landscape is facing some turbulence, with whispers of trouble brewing after a period of rapid growth. While it's not a full-blown crisis, there are certainly challenges and uncertainties that warrant attention. Here's a breakdown of the current state of affairs:

Reasons for Worry:

• Overaggressive growth and shaky partnerships: The hype surrounding BaaS led to some partnerships forged without thorough due diligence. Some fin-techs partnering with banks had questionable business models or struggled with regulatory compliance. This exposed banks to potential reputational and financial risks. In 2009-10 I managed default for Wachovia Bank. If you recall they got fined $160 million dollars for laundering money for Mexican Cartels. We found money in walls, cars buried under dirt filled pools, the real wild west until the Feds took over. Bad guys want to hide their stash, the best way is to grind it through a dumb fintech app that doesn't check anything. Due diligence seems to have been overlooked in this new frontier.  
• Regulatory scrutiny: As BaaS evolves, regulators are taking a closer look, concerned about potential systemic risks and consumer protection issues. This increased scrutiny could slow down growth and impose stricter compliance burdens.
• Profitability squeeze: Many BaaS players, particularly on the fintech side, are struggling to turn a profit. The reliance on transaction fees and limited control over interest rates makes it difficult to achieve sustainable revenue streams. Even big banks are getting hit on the back side of the head with fines for over charging customers for non sufficient funds and repeating daily usury fees. These apps fail to check every state law, as well as federal regulation before they implement big charges.
• Competition heating up: With established banks and tech giants entering the BaaS fray, the competition is getting fiercer. This puts pressure on smaller players to differentiate themselves and find a clear niche. It also encourages advertising that over promises. They use gameplay tactics, prizes, puzzles all sorts of kooky gimmicks to attract. Coinbase uses influencers and pays referral fees. Crowdfunding, promises to win a supped up car, content that is not true are common. 
• Most are vulnerable to hacking and imply that the customer is safe. My son did not even know he had Zelle and someone stole from his Bank of America account which BofA did not make him whole.

However, it's not all doom and gloom:

• Strong underlying potential: The core value proposition of BaaS – offering seamless financial services embedded within non-financial platforms – remains compelling. It has the potential to disrupt traditional banking models and improve financial inclusion.
• Consolidation and adaptation: The current challenges might lead to consolidation and restructuring within the BaaS ecosystem. This could result in stronger, more sustainable players emerging.
• Regulatory clarity: Increased regulatory scrutiny, while challenging in the short term, could provide much-needed clarity and ensure responsible growth in the long run.

So, where does this leave us?

The BaaS industry is at a crossroads. While some companies might falter, the overall trajectory remains positive. The key will be for players to adapt, address concerns, and focus on offering truly valuable and compliant financial services.

Keep an eye out for these key developments:

• Regulatory pronouncements and their impact on the industry. Our government and those in EU are actively investigating and probing into every practice. Not a day goes by without a call.
• Consolidation and partnerships among key players.
• Innovative BaaS offerings that provide real value to both businesses and consumers.

 

Banking as a service has made accessing financial products and services more accessible for everyone. However, for organizations offering this convenience, there are also increased third-party risks, including cybersecurity, compliance, business continuity concerns, and the potential for reputational damage

BAAS Wild West

Trouble in Paradise: A Rundown of 2023's BaaS Woes A Few Highlights this past year:

While Banking as a Service (BaaS) has been touted as the future of finance, 2023 painted a rather turbulent picture for the industry. Here's a closer look at some of the prominent issues that arose:

1. Moonstone's Tangled Trajectory:

• From FTX to Farmington: Bank Prov's BaaS partner, Moonstone Bank, initially sought to cater to the crypto and cannabis industries with FTX backing. However, it quickly backtracked, dropping the "Moonstone" name and returning to its original moniker, Farmington Bank. This flip-flop raised concerns about stability and commitment.

2. BankProv's Crypto Stumble:

• Mining Mishap: The bank suffered significant losses from lending against crypto mining rigs, highlighting the volatility and unpredictability of the crypto market. This also exposed potential weaknesses in BankProv's internal controls and risk management practices. Last year my dry cleaner's office had a huge mine spinning because the power was stealing from a neighbor commercial. Scammy people abound...

3. TAB's Predatory Partnership:

• Puppy Loan Blues: The BaaS platform's partnership with EasyPay, a BNPL company accused of predatory lending practices, particularly targeting puppy loans, led to a downgraded CRA rating. This episode drew attention to the ethical considerations surrounding BaaS partnerships and the potential for reputational damage.

4. OppFi's Lending Limbo:

• True Lender Tussle: The California Department of Financial Protection and Innovation (DFPI) locked horns with OppFi, a fintech lender partnered with BaaS bank FinWise, over who bears the true responsibility for OppFi's allegedly unfair loans. This legal battle highlighted the regulatory ambiguities surrounding BaaS partnerships and lending models.

5. AML Woes Across the Pond:

• European Crackdown: BaaS platforms Solaris and Railsr faced anti-money laundering (AML) issues in Europe. Railsr's Lithuanian entity, PayrNet, even fell victim to regulatory action and was forced into bankruptcy. This raised concerns about the adequacy of AML compliance measures within the BaaS ecosystem.

6. Fintech Biz Weekly's Bombshell Report:

• BaaS Market Unveiled: The inaugural BaaS market report by Fintech Biz Weekly shed light on the industry's complexities and challenges, providing valuable insights but also potentially stoking further anxieties about the sector's future.

7. SVB's Fallout:

• Ripple Effects: While not directly related to BaaS, the implosion of Silicon Valley Bank (SVB) sent shockwaves throughout the banking ecosystem, including BaaS players. This heightened regulatory scrutiny across the industry, with a particular focus on banks' risk management practices and exposure to volatile assets.

These are just some of the many BaaS-related troubles that surfaced in 2023. While the industry undoubtedly faces challenges, it's important to remember that growing pains are often part of the evolution process. The key forward will be for BaaS players to prioritize transparency, compliance, and responsible partnerships to weather the storm and build a more resilient and sustainable future for this innovative financial model.

Post-Goldman & Apple's Savings Account Launch:

1. Regulatory Crackdown:

• Cross River: Faced fines and a consent order for fair lending compliance issues, highlighting the lack of due diligence within BaaS platforms.
• Synapse & Evolve: Their clients, like SoLo Funds and Money Ave, faced trouble with regulators for unlicensed lending, suggesting lax oversight within the BaaS ecosystem.

2. Consolidation & Controversy:

• Bond Acquisition: FIS acquired Bond, indicating industry consolidation amidst changing market dynamics.
• Maza's Misleading Practices: a16z, Unit, and Blue Ridge-backed Maza faced criticism for targeting undocumented immigrants with misleading claims, raising concerns about ethical practices within BaaS.
• Stripe & Celtic's Embarrassment: The unauthorized launch of the "no KYC" crypto card Laso without their approval raised questions about their control over their partnerships and compliance procedures.

3. BaaS Dependence Backfires:

• Lineage's Fall: Lineage's reliance on BaaS deposits led to financial instability and ultimately, a hostile takeover by its shareholders, highlighting the potential risks of overdependence on external funding sources.

Overall, these events suggest a growing landscape of challenges for BaaS providers, including:

• Increased regulatory scrutiny: Regulators are tightening their grip on BaaS platforms, demanding stricter compliance and due diligence practices.
• Reputational risks: Misleading practices and compliance failures can damage the reputation of BaaS providers and their partners.
• Financial instability: Overdependence on external funding sources can expose BaaS platforms to financial risks and potential hostile takeovers.

Additionally, the deterioration of the Goldman-Apple relationship underscores the complexities and uncertainties surrounding tech giants' entry into the financial services space.

 Then we also have these other events:

2023 OCC hired a con artist as its first-ever Chief Fintech Officer. How did he pass background? 

The BaaS platform Solid faked its revenue number to raise a Series B and is being sued by its investors. Liars.

Synapse and Evolve are arguing over who's responsible for some $13 million in missing customer funds.???

Metropolitan Commercial Bank got a consent order for partnering with Movocash, which fraudsters used to steal millions in COVID-era relief funds

Blue Ridge, operating under a BaaS-related consent order from 2022, announced it would seek to raise fresh capital as it reduces its exposure to fintech

Mercury filed suit against one-time partner Synapse, in an effort to recoup $30 million Mercury claims it is owed & describing Synapse as in "financial freefall."

In the Wild West of olde' times it was the hardware store that sold shovels not the digger who made money. 

How To Qualify For a Mortgage

The Home Buying Hustle: How to Qualify for a Mortgage Like a Boss Snag your dream digs without the drama

Hey, C. G.  here, and let's talk about the ultimate power move: buying a home. It's not just about bricks and mortar – it's about financial freedom, building equity, and owning your living situation. But before you start popping champagne bottles, there's one hurdle to leap: the mortgage.

Qualifying for a home loan can feel like deciphering hieroglyphics in a financial pyramid scheme, but don't sweat it, darlings. I’m breaking it down into bite-sized nuggets of wisdom you can use to slay that loan application like the financial wizard you are.

First things first: get your financial house in order. Think of it as a pre-mortgage glow-up. Here's the lowdown on the key areas’ lenders eyeball:

  Credit score: Your credit score is your financial report card. Aim for a squeaky-clean 700 or above to snag the best interest rates. Don't have stellar credit? Don't fret! Work on paying down debt, avoiding late payments, and building a positive credit history.

All credit is fixable, given patience and time. Ask about my tips and tricks to raise your FICO score which is the center pin of interest rates for your mortgage. Your mortgage score will not be the same as your consumer credit score.

  Debt-to-income ratio (DTI): This fancy term basically means how much of your monthly income goes towards existing debts. Ideally, you want to keep your DTI under 36%, and 43 for total overall. Think of it like this: the less you owe, the more you can slay that mortgage payment. Lenders include car payments, credit card bills, student loans even if deferred, child support, and whatever else shows on your mortgage credit report.

  Down payment: The more you can put down upfront, the less you must borrow (and the less you pay in interest, honey!). Aim for at least 20% to avoid private mortgage insurance (PMI), even a few thousand dollars can make a difference.

Now, let's talk loans:

You've got options!

·       Conventional loans: These are your classic mortgages, with stricter requirements but lower interest rates for well-qualified borrowers.

·       FHA loans: These are government-backed loans with more flexible credit and down payment requirements, perfect for first-time home buyers.

·       VA loans: Veterans, this one's for you!

VA loans offer amazing perks like zero down payment and no PMI.

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Remember, knowledge is power! Do your research, compare rates, and don't be afraid to negotiate. Find a lender who's on your team, someone who speaks your language (and not just financial jargon). Let’s talk on the phone before you actually apply. Don’t allow everyone to pull your credit.

Bonus tip: Get pre-approved for a mortgage before you start house hunting. This way, you'll know exactly how much you can afford, and you won't waste time falling in love with a money pit you can't snag. This also alerts the seller that you are ready to close.

And finally, remember this: buying a home is a marathon, not a sprint. Be patient, be prepared, and trust your gut. With the right tools and a whole lot of hustle, you'll be popping champagne corks in your dream home in no time. Now go forth and conquer that mortgage like the financial rockstar you are!

P.S. Don't forget to check out my website for more home buying tips, DIY hacks, and financial boss inspiration. And if you need a little extra guidance, I have Realtor contacts, Escrow Officers, Inspectors, Credit Repair Experts, Contractors, and Attorneys who run killer real estate business in every city – we have your back when it comes to finding the perfect place to call home.

Let's go get your dream house friends!

C G

NMLS 324982

Finding the Princess Pumpkin For Your Carriage Real Estate Investing

So another person asks me to help them analyze multi family deals for free.

“I am new to multifamily and would like to find a mentor to help me in this journey. Specifically, I would like a mentor who can walk me through a deal, answers questions, and teach me the ins and outs of multifamily. I am not a complete “noob” as I have experience in single family and have read several books on multifamily. I am looking for a two hour-ish session where we walk through a deal, answer questions, and get a deeper understanding on the subject.”

 

With the real estate bug biting, and the allure of passive income from rental properties is whispering sweet nothings in your ear. But before you jump headfirst into that fixer-upper frenzy, take a deep breath and equip yourself with some knowledge. Because in the world of real estate investing, not everything that glitters is gold (or a guaranteed steady stream of cash).

I will help you but no one is going to give you two hours for reviewing many deals free. I will give you free advise but I need you to do the initial research. Also need to know what your financial situation really is: FICO middle, how much cash you have in checking/savings/what your w-2 income is/what your personal housing payments are/ car and student loans and credit card totals. Then I know if you can carry something on your own. Also how many deals you closed, how long, and what you hold as rentals today.

If you have a deal to review- send me the address, rents, the survey you did on comps and rent survey, demographics of the location. 1. So you find an address. 2. look on Zillow for similar square footage closed properties, call a local CRE agent to give you a comp, determine square footage/lot size/room counts 3. go on government census numbers to see the demographics of block/ crime stats/ median income number 4. see if you can determine who employers are for this subject location. The first couple will be difficult to compile the numbers fast. I have digital tools that I pay for plus ones that look at the roof in live time, so my stats research is faster and may skew different. Once you have the details of who your tenant is for this location, we can do a zoom call or phone and I will show you how to dig further. After you do 100 of them you will get faster at determining which ones are worth the time to research and see where you might invest. Are you planning on doing this locally or remote? What are your construction skill sets? If going remote you need a team of boots on the ground that's the second step.

 

Fear not,! This is your roadmap to navigating the sometimes-treacherous terrain of property investment. We'll break down the key factors to consider when evaluating a potential money-maker, so you can distinguish the diamond in the rough from the money pit in disguise.

1. Location, Location, Location: It's a cliché for a reason! Research the neighborhood thoroughly. Is it bustling with young professionals or retirees seeking peace and quiet? Are there desirable amenities nearby? What's the crime rate like? A thriving area with high demand for rentals translates to higher occupancy rates and potentially higher rents.

2. Crunch the Numbers: Don't be afraid to get nerdy with your finances. Calculate the estimated purchase price, closing costs, renovation costs (if any), property taxes, insurance, and potential rental income. Then, factor in vacancy periods and maintenance costs. Can you cover all the expenses and still turn a profit? Tools like the "1% rule" and "cap rate" can help with this initial assessment.

3. Condition Counts: Inspect the property with a critical eye (or bring along a trusted expert). Is it structurally sound? Are there major repairs looming? Remember, even cosmetic fixes can eat into your profits. Prioritize properties that require minimal work and renovations.

4. Future Forecast: Think beyond the present. Is the neighborhood likely to experience long-term growth? Are there any planned developments that could affect property values? Research zoning regulations and future development plans to avoid any nasty surprises down the line.

5. Don't Go Solo: Surround yourself with a team of trusted professionals. A good real estate agent, mortgage broker, and property manager can be invaluable assets, saving you time, money, and headaches.

Bonus Tip: Emotion can cloud judgment. Don't fall in love with a charming fixer-upper before considering its financial viability. Stick to your investment criteria and make decisions based on cold, hard facts.

Remember, real estate investing, like any investment, comes with risks. But by doing your due diligence, researching thoroughly, and making informed decisions, you can increase your chances of landing a property that's not just a pretty face, but a true financial asset. Happy house hunting!

P.S. Share your own real estate investment tips and experiences in the comments below! Let's build a community of savvy property sleuths.