 to finding your piece of the rock on Think Tech Kauai. I'm your host, Abley. I have been a licensed real estate agent since 1973. I'm the owner of Century 21 iPropery, Kauai, and work with close to 100 wonderful real estate agents in real estate sales. I started Abley seminars in 1980. I have taught over 10,000 students to get their real estate licenses and have taught continuing education classes for licensees to renew their license every two years. Our show is dedicated to helping buyers and sellers understand the process involved in a real estate transaction. Our special guests will talk about legal issues, escrow, title, getting a loan, surveys, home inspection, insurance, contracts, wills and trusts, and much, much more. And today we have a very special guest, a veteran of the real estate mortgage industry, Lisa Taormoto, who is a vice president of residential mortgage department at finance factors. Lisa, thank you so much for taking time out of your business schedule to be with us today. Oh, no, thank you for giving me this opportunity. You really appreciate it. Thank you. I've known Lisa for a few years now, since we both work in a volunteer at Hawaii Home Ownership Center, which we'll talk about in a few minutes. But Lisa, to let the viewers know a little bit about your background, can you tell us where you grew up, your education, your family, and your work history? So I was born in Hawaii, Queens Hospital, relocated to the mainland, though, as a baby. So I was several months old, actually, when we, me and my family relocated to the mainland, then moved back to Hawaii when I was a teenager. Been here ever since. I don't think I'll ever leave. I can't imagine living anywhere else in the world. You know, I started working in my teens and I really haven't stopped since. Started as your typical teenager, working fast food, 7-Eleven, that type of job. But then I started my career, my loan career, I'd say, at International Savings. Some of you may remember International Savings. Many years ago, I started there. We eventually merged with Citibank and then merged with Central Pacific Bank. At International Savings, I started as a clerk and went through several positions in the company, which was really good for me because it gave me the opportunity to learn all the different facets of banking. Wow. So you've had quite a history, especially with Central Pacific Bank and Citibank, trying to merge or have a, we won't say a hostile takeover, but... But it was at that time. It was in the news that way. Yep, okay. So now what made you get into the mortgage business from being a teller? So I really wasn't ever a teller-teller, but I was in branch operations. I worked for the branch operations manager. I did go through several different areas of the bank, but at the time I was in branch operations. And Iris Tugucci, who was running the loan department, some of you may have heard of her, she was in the loan business for many, many years and recently retired. She was running the loan department and she was the one who encouraged me to move to loans. She was just like, you just need to be in lending. I did, I went and I haven't stopped since. One thing that keeps me in lending though is it's always changing. So it's never stagnant. In our world, we always say that the only constant in lending is change. It's always evolving, you're always learning and having to learn new things. Products, regulations, it's just never ending. So you've been through a few recessions then? A couple, a couple of them I'd say I've been in the business long enough to have been through that as well as refinance boons. I've been through a couple of those as well. Sure, so thank you so much. So what's your responsibility at finance factors? At finance factors, I actually oversee the residential lending department both in operations and sales. So yeah, I oversee everything in residential lending. So is there a commercial division as well? There is a commercial division right now. Kay Keeto runs our commercial division. We have several great individuals in there and that's the other part of our lending business. Okay, so what's the background to finance factors? Because I know historically, they're with the Chinese community first. And then they were evolved. Right, that's a great word for it. And there's a thing that we say that it all started with pots and pans. So over 70 years ago, it was actually 1952, there were six individuals, very progressive, that wanted to start a company really to help the working class minorities. Thanks at that time, we're not very interested in providing financing for small household items, purchases, refrigerator stoves and yes, even pots and pans. At that time, it was even hard to get financing for a car. So it was several men of Chinese descent, the Lao, Cheng, Chen, Feng, Yi, Choi and Peng that really started finance factors to do that, to help those minority families to purchase things, you know. And here we are today, we're still helping the community with financing, but primarily in residential and commercial lending. I know in my history of being in real estate, that finance factors was a developer and did Makakilo. Makakilo, right. Did the whole mountainside. Yeah. Well, you have a good memory. I'm old. But then I also know that you had Watsworth Yi and Hiram Fong senior and some really notable people in the community that really want to help the Chinese community. And then of course you've merged and diverged quite a bit now. So that's great. For sure. Okay. A lot of the descendants are still involved in the company today. So it's really great. Right, right. So now, what do you do in the home buying process? When someone comes to you, you've had so much experience now. Let's say I'm a brand new, you know, newbie. I just got married, got out of college and have a job. Yeah. And I want to buy a house. So what do you advise or what do you do? What's the process you go through? You know, it's really important that there's several people involved in it, right, not only the home buyer and us. It's also the realtors, right? And it's really collaboration with all of us, you know, that we meet, we talk, we find out what you qualify for. Not only by numbers of what you qualify for, but as a homeowner, what are you comfortable with, right? What kind of home are you looking for? The realtors are so important in that, right, that you share the information and you let them know what they qualify for. So they're showing them the right type of home to look for. So to me, it always starts there. It starts with talking to the people that are going to help you through the process. So when I meet with you, and let's say again, we're role playing here, I'm brand new. I have no idea what the heck I'm supposed to do. What are you going to ask from me? You know, documentation is really, really important. You know, it gives us a good handle on your actual finances so that we can qualify you properly. You know, and we often refer to it as a two, two, two, two, because we, you know, we get two years of tax returns with supporting documentation, two months of bank statements, two pay stubs. Then we have a better, you know, feel and look to see what you can qualify for. You know, the other thing we all, well, I always tell my buyers is, tell me what I should know. You know, because it's, that's all paper, but you know, things come out throughout the process of a loan. And if we know about them upfront, we can help the buyers through it, you know, and determine what we need and what we should be doing to help them to overcome certain situations, right? So, you know, is there some credit issues that I need to know about that happened recently or maybe in the past, you know? We look at a fairly long credit history. So if something happened in the past, it's going to come up and, you know, it's always best that you share with your loan officer what happened, like why did it happen? How did you overcome it? You know, sometimes there's tragic events in a person's life that can affect their credit. You know, lenders take that into consideration. You know, it's not only the credit issues, but has there been any changes to your job or your income? You know, very important for us. What about the money situation? What kind of down payment do you have? Where is it coming from? You know, is it liquid assets? Are you going to be borrowing from your 401k? You're going to be taking out your retirement funds. You're getting gift monies. You know, all of those things have a play in the qualification. So just share with me. Just tell me. So now you're a detective kind of. Oh yeah, well, sort of, sort of, yeah. OK, so now what's the difference between a FICO score and a credit report? So the credit report shows credit history. So, you know, what type of accounts you have, what's your monthly payment, and what's your payment history. A credit score is determined by all of that information. And you know, there's a company that looks at all of that and determines what your credit scores are. And actually there's three credit scores that are generally reported by three different repositories. OK, and they're important in determining your interest rate. If you have a high credit score, then it's a lower interest rate. If you have a low credit score, then it's a higher interest rate, is it? That's correct. That's correct. Yeah, credit scores are very important not only for qualification, but it does affect interest rates. OK, so what type of loan programs are there for first-time home buyers? Because they're saying, I'm priced out of the market. The interest rates are too high. What can you do with either finance factors programs or with government-assisted programs? You know, there are a lot of programs out there, not only Freddie Mac, anime-type programs, or FHA. You know, local lenders also have some first-time home buyer programs in place. You know, another thing that has become very popular in the news today is buy-downs. You hear three, two, one buy-downs or buy-down the interest rate, things like that. And there's a couple of ways that you can look at it. One is to have a lower interest rate for better monthly payments. You can pay more points. Points are really the cost of the rate. Or there are things such as a three, two, one buy-down where you actually, and that also can be a couple of different things. There's a lot of developers today who give credits. And a lot of times those credits are best used to buy-down the interest rate. You know, but there's also like a three, two, one buy-down where people will pay such an amount of money, but their starting rate is reduced by a 3, 2, 1 percentages. So over the next three years, your rate will be lower and then it will come up to the actual start rate of what you qualified for. Okay, so walk us through one. Say let's have $500,000 in our condo or a townhouse. Yeah. Three, two, one program. What kind of down payment do you need and how does a three, two, one work? So down payment is always a scary question for buyers. You know, and in today's world, really the minimum down payment for a normal type traditional financing program is 3%. So that's, you know, your Freddie Mac, Fannie Mae, FHA type programs at finance factors. Actually, we have a great multi-collateral program where some buyers don't even have to come in with any money at all. But what we do is we take additional collateral from a family member or even a close friend. So we use the property as collateral in addition to the property that they're buying. And we take both properties as collateral, but it doesn't require down payment in most instances for the first time home buyer. You know, and it's really great because the people like let's say mom and dad are, you know, putting up their property as collateral for their child's purchase. The parents don't have to be on the note. So they're not responsible for repayment. You know, they do sign the mortgage because we're taking their property as collateral. So, you know, really great program where parents who want to gift their kids don't actually have to gift them money. So they can gift them collateral in their home. Wow. But if someone's wanting a three, two, one buy down, so let's say you're starting interest rate today at 7%. So in the first year, we would reduce that, the payment amount to a 4% interest rate and then a 5% interest rate and then a 6% interest rate and then ultimately end up in your starting rate. But what happens is there's like funds set aside and the difference between the two rates are paid from that account. So you still do have to have funds, but the payment is easier. So they have to put money aside to cover that difference. Yes, in most cases. But you know, that's where it helps. Like let's say you have a developer that is gonna pay for that. For the first time home buyer, it doesn't affect them at all and it just gives them a chance to catch up to payments. So let's take this hypothetical of a three, two, one. All right? So let's say within that time period, the interest rates go down. Can the buyer then refinance and take advantage of the lower interest rate? They could. They're not tied into, there's no prepayments or anything like that. So they're not tied into the mortgage. So yeah, if rates were to drop again, they could refinance. Because right now, the word I hear at different real estate meetings is that interest rates have to come down sometime. We don't know when. Right, that's the key. Yeah, but they're banking on coming down to maybe a five and a half or around there. At least that's the word I hear from time to time. So if someone were to start at seven and it went down to five and a half, then it would be wise for them to refinance then, wouldn't it? It most likely would at that point because that's a point and a half difference. But of course, you know, when we work with individuals for refinances, we do make sure that on a payment basis, it does make sense for them. Sure. Okay, so now I've heard this thing called the mortgage credit certificate. How does that work? Yeah, that is such a great program for first time home buyers. Mortgage credit certificate or MCC, as it's commonly referred to, it really reduces the amount of federal income tax for the homeowner. So I think it was created like in the early 80s maybe and it allows first time home buyers to take 20% of their mortgage interest as a direct dollar for dollar tax credit. And then the remaining 80% is a tax deduction. So it really does help the homeowners not only on a tax benefit side, but as a lender, we can use that tax savings for qualification. So it increases their purchase power. You know, so it's a really great program and it was really designed to help these low to moderate income families to obtain home ownership. So it's your income... But there are, there are, I was just gonna say there, there are some restrictions. There's some income restrictions, occupancy restrictions. So like you have to be an own occupant. You can't have owned property in the last three years. So the best thing for buyers is to really speak to their lender about it, to make sure that they get all the questions answered and that we can make sure that they qualify for MCC. Great. And are there participating lenders that work on the MCC? There is. You have to be an approved lender to offer MCC. And there is a website that you can go to that will tell you who the approved lenders are. Okay. And I'm assuming that finance factors is an approved lender. Yes, we are. Okay. All right. I don't think we're on this year's brochure yet though. Okay. We just got approved this year, so. Great. Okay, now what's the other program that I heard about the 40,000 maximum down payment assistance program and how does that work? There's also a lot of down payment. You know, there's many different down payment assistance programs and you really just have to follow, make sure you qualify for them and then the source will actually, you know, give people money for down payment. So it's another great opportunity for people to become homeowners. So give me more details on that. I'm sure the consumer is saying, okay, how much can I borrow and what's the rules on what you pay back? You know, it depends on the program. There's some that are forgiven. So there is no repayment. You know, there are some that, there are repayments done at a later date, maybe when somebody's in a better financial position. But most programs I believe are, you know, trying to make it so that homeowners can purchase homes and, you know, if it can be one that's forgiven that's even better. That's amazing, isn't it? It's like a gift from somebody. Uncle Sam. Right. Yep. Right? Organizations, yes. Right. So there are other programs that are available besides the MCC and the down payment assistance program then. Well, there's several down payment assistance programs. All right. So how does a buyer prepare financially to qualify for a loan? I'm brand new. I just got a job. I don't even know how to balance my checking account. Oh, I meet with you with my wife. Okay, we just have a kid and we need a home. So what are you going to tell me now how to qualify to financially prepare to get a loan? So similar to what we were talking about a little earlier, you know, we really got to sit with you, go over your finances, see what you can qualify for. You know, you mentioned you were newly employed. So, you know, in lending, generally people would have to be employed for a two year minimum in the same line of work. Although, you know, there's, you know, exceptions to that role. Let's say you just graduated from college and now you got a job, you know, we get a copy of your diploma saying you just graduated. You just got a job that makes sense, right? But, you know, if you just started a job a month ago and you have no history of employment and you didn't graduate recently, you know, that might be a little difficult for you because there's no history to show that you can maintain that job. But, you know, for the qualification, really, we're going to ask to see your documentation, sit with you, talk with you, and determine what you qualify for and that is within your comfort level. Okay, great. All right. Now, you said that they had to be working at least two years, typically. General rhythm, yes. Okay. And then how important is that credit report again? What if they're behind on their payments? They were just goofing around when they were in college and didn't make all the payments on time? Now, does that come back to bite them? It can. It depends on how long ago it was and how severe it was. You know, you have a couple of late payments on your Macy's or Visa. It might not be as bad as if you had two mortgage late recently. You know, it makes a difference. Timing is a big thing. What type of credit that there's deal infancies on and how many deal infancies there are. Okay. Now, I know you've been very active in nonprofit organizations. And Hawaii Home Ownership Center is where we met because we're both serving in that company or a nonprofit. Right. Tell us what the mission of HHOC is and what your role is in HHOC. You know, HHOC Hawaii Home Ownership Center, you know, like you said, I'm a volunteer there. I'm on the development committee and I've been there for several years now. Really, that's the fundraising committee. It's an organization that I'm very, very passionate about because you know, the center really is about getting more people to become homeowners. You know, they provide education, support individuals with workshops, classes. I've heard of people who have been members working with them for years. You know, and the counselors that HHOC helped them to budget their money, you know, teach them how to save money, you know, teach them how to get financing for a loan. You know, and in addition to that, on the other end of the spectrum, they provide foreclosure counseling even. You know, and they right now, they also offer realtor, I'm sorry, not realtor, but rental counseling. You know, Reina Miyamoto, the director there and her team are just awesome. Such a great group of people. So now they have some fundraisers that we've been participating in. Can you give us a highlight of some of the key fundraisers and how the viewers might be able to participate if they have some extra money? Extra money is always easy. You know, they also have a website and you can just go there and donate funds if you have extra available. There's a couple of events every year that you were just mentioning. There was just recently a golf tournament that was very successful in a week or so. We have a luncheon that is another great event. You know, the Hawaii home ownership people that have been helped by the center come and talk to the group and you learn about the center and what they do. So it's a great event. And another one coming up in November is called the Flavors of Neighbors event. Awesome, awesome event at a local establishment in downtown. That we get restaurants to come in and give little tasting bites. There's wine. Normally there's other types of liquor available like beer and some. Last year I think we had someone giving out bourbon. But you know, it's really about getting together and tasting all the food, having a few drinks and enjoying each other's company. And it's another great event for the benefit of the home ownership center. And for those that get drunk, they even have a drive home program. That's right, that's right. Okay, not that we want anybody to get drunk, but that could happen. That could happen. Yeah, so now we only have a few more minutes left, but what advice would you give to your children, to your nephews and nieces about why they should have a home and what they can do to prepare it to be a homeowner and to get along? So for my very young, my very young relative, like you said, nieces, nephews, that type of person who's not ready for home ownership yet, but they can start at an early age. And once they kind of are starting to think about it seriously, I kind of always tell them, we'll sit down, talk about again, what would you qualify for if you were making this much money or even at the amount of income that they have today, that they may not be quite ready yet, but they're getting there. I tell them, let's say you live at home and you're gonna be paying a $2,000 mortgage in a year or two. Start putting that money away. Open a different account. Pay yourself the mortgage amount because it's only a good thing for everybody because one, it helps them to become ready for that monthly payment and not be shocked by it, by coming from nothing to $2,000 a month or $3,000 a month. And then what happens is they build wealth at the same time. That money can be used for down payment. It can be used for appliances. It can be used for furniture. So they're already starting out on a positive note. Then when it becomes really serious, you really do have to get with the lender, get with the realtor, collaborate like we talked about and get qualified and find the right home for you. Great. Now, I believe we do have your email address that we were flashing. Lisa Tomromoto. And you can look her up at Lisa T. At financefactors.com, yeah. Great. And if you just Google her, you'll find her everywhere. Yeah, if anybody wants to get that information on MCC or the Hawaii Homeownership Center, please feel free to email me and I'll make sure I get that information to you. Lisa, thank you so much from your busy schedule with all the good you do with the community and Hawaii Homeownership Center. You've been a breath of fresh air when I've been to the meetings, trying to see if we can raise awareness and money for HHLC. So thank you for being here. Thank you, Abe. I mean, oh my gosh, what you do for the community is just amazing in all the years of experience that you have and share with people. It's just so awesome. So I thank you too. Thank you. If you have any questions about the real estate school and would like to have more information or even think about a career in real estate, you can go to AbeLeaseSeminars.com. Actually, we're starting a new class tomorrow night on the live webinar, but we also have independent study where the students can take it at their own pace and take the course with our video tapes. We're the only school with the video tape of both the live class, of course, that's a live webinar, and then we have a self-paced independent study. So we welcome you to join us. And if you have any questions, please feel free to email me or call me at any time. But thank you very much, folks, and have a wonderful day.