Appraiser reclassifies duplex, borrowers pull cash out

Mortgage broker: Shawn Sidhu, C2 Financial Corporation.

Property type: Singlefamily residence with attached accessory dwelling unit in Oakland. Appraised value: $2,091,250. Loan amount: $1 million. Loantovalue: 48%.

Loan type: Super jumbo 30year fixed.

Rate: 4.125% no points with a lender credit towards closing costs.

Backstory: My client’s needed to pull out $150,000 as cashout proceeds from their singlefamily home. The residence included a basement, which was converted into an accessory dwelling unit and permitted by the City of Oakland.

However, the accessory dwelling unit has its own separate address, technically making the property a duplex, something that’s uncommon to the area.

After inspecting the home and while completing the report, the appraiser notated the highest and best use of the property is as a singlefamily residence with an accessory dwelling unit, as opposed to a duplex. This designation greatly increased the home’s appraised value.

The other complication was that the coborrower was selfemployed and had declining income within the past two tax years, though it improved in 2019.

Fortunately, we were able to utilize a profit and loss statement to supplement two years of tax returns.

Typically, jumbo investors require 12 months of reserves, consisting of a total housing payment which factors in the principal and interest payment, property taxes and homeowners insurance. These borrowers didn’t have enough to meet this liquid reserves requirement.

Thankfully, we were able to place it with a particular investor who utilized a retirement account to fulfill the reserves requirement.

As a mortgage broker, we work with a multitude of wholesale lenders that provide more flexible guidelines than a bank or credit union.

Shawn Sidhu, C2 Financial Corporation, 4086108011, shawn@shawnsidhuteam.com.