Morning! This is MF Lending - the crisp pinot noir of mortgage newsletters. We’re the fool-proof way to serve up mortgage and real estate market knowledge without any of the guesswork. So you’ll look like the smartest agent in the room (and you are!)

Here’s what we’ve got for you today:

1. CoreLogic Predicts Home Prices Rise in 2023 🏡

2. Best Tool for Investor Clients 🔨

3. Is a Condo Warrantable? 5 Things Agents Should Keep an Eye Out For 👀

By the way, this article on The Best Email Tool I Use Daily is the most clicked link in this newsletter, you should check it out if you are interested.

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Nuwave Rates Today 📉

CoreLogic Predicts Home Prices Rise 3.7% in 2023 🏡

CoreLogic released its monthly study on home appreciation:

Here is the current map of the US looking at YOY Change from Feb ‘22 - Feb ‘23. Home values are increasing in the southeast the most.

Expectations from CoreLogic are that home growth will slow, but will continue to rise at a rate of 3.7% nationally.

But in states like TN, FL, and SC, we could see growth well above the national average.

Do you think this trend will continue? Or do you think this CoreLogic study is out of its mind?

Tough to say at this point, but as inventory remains tight, and buyer demand grows, I do expect prices to continue to rise.

The only way I see this trend reversing would be if the FED keeps rates too high for too long and we go into a massive recession…but we shall see.

Best Tool for Investor Clients 🔨

If you have clients who are investors or developers - this tool could be invaluable to them.

CityBldr.com - this is so cool.

This tool allows users to instantly locate, and analyze properties that can be improved or redeveloped.

As an example, this tool can show properties that are single-family homes but already zoned for two units/HPRs.

Here is a shot from the app over East Nashville:

Everything in blue is property being underutilized.

If you click on any of them it gives you property details, zoning for the property, lot size, depth & width, and the best use for the parcel.

Now, as we know, these properties aren’t technically “for sale” but if you have investor or developer clients looking for opportunities and aren’t afraid of cold-calling, you can provide them with targets.

You can use this to:

1. Locate HPR opportunities

2. Find commercially zoned parcels for STRs

3. Analyze emerging areas around the city

If you end up using this - please let me know!! I’d love to know about other use cases or big wins you have by using this platform. Enjoy 😀 

Is a Condo Warrantable? Things Buyer’s Agents Should Keep an Eye Out For 👀

Recently, I have had several clients looking to purchase condos instead of single-family homes.

The hardest thing about lending for a condo is determining if the property is "warrantable" by Fannie Mae and Freddie Mac.

If it is considered warrantable, the client can receive a conventional loan, just like normal.

However, if it is deemed "non-warrantable," the client cannot get a conventional loan.

The only alternative is to turn to a private loan or portfolio loan.

Portfolio loans typically come with higher interest rates, larger down payment requirements, and stricter underwriting guidelines.

The main problem for agents is that "non-warrantable condos" are not always obvious in the listing.

The only way to determine if a project is warrantable (outside of the listing agent knowing the answer) is to get an "HOA Condo Questionnaire" from the existing HOA.

Lenders are required to get this document during underwriting, but that doesn't help if you're still in the offer stage. On top of that, it can take some HOAs weeks to get it back to lenders.

To save you time, here are the 5 most common reasons condos may be considered non-warrantable. Use these to ask good questions to the listing agent and protect your client as best as you can:

1. Too many units in the building are rented out instead of owner-occupied.

   This is the biggest and most common issue, especially in Nashville. As a general rule, if more than 40% of the units in a condo project are rented out, it may be non-warrantable.

2. The building has pending litigation.

   If the building is in the middle of litigation, it's best to avoid it.

3. Delinquent homeowners association (HOA) fees or reserve funds.

4. The building has a high concentration of commercial space.

5. The building is not properly insured.

   The insurance policy should cover the entire building, including common areas and individual units, and should include liability coverage for the HOA."

This is not a catch-all, and there may be other reasons why a condo is determined “non-warrantable”. If you are a buyer’s agent, always be sure to include a financing contingency in your condo offer until you get the questionnaire back.

If you are a listing agent and you want your deal to move smoothly - you can also get the HOA to complete this for you before you even list the home. This ensures to the buyers it is a warrantable condo and saves the lender a ton of time after being under contract.

The Cul-de-Sac

Mark your GCal & Potential Impacts 📆

1. May 10th - We continue to mark this date. This is when we think the rates turn.

2. April 27th - MF Lending is hosting a webinar on How To Use AI to Grow Your Real Estate Business - if you are interested in signing up please respond to this email and we will get you more information on it.

Thanks for reading - that is all we have for today 😎. By the way - what do you think of our new logo?

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— Michael F DiLucchio