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1)Lack of
disclosure: Buyers need to be honest. Disclose everything that remotely affects
the financing of the home.
I
can fix “broken deals”. I’m here to
close your loan on time. But I can’t fix issues that aren’t disclosed.
For
example: Just because an issue doesn’t pop up on a buyer’s first credit report,
it does not mean it won’t raise its ugly head at the very end of underwriting. Layers
of checks occur after the initial mortgage credit report.
Issues
that involve past government contact, (i.e. tax liens, unpaid student loans,
pending litigation, or criminal fines) often go undisclosed (particularly where
there is a “remarriage”) and one (or both) of partners wish to hide their past
from the new spouse.
Often
these items are so far in the past they (conveniently) “forget” to disclose. A CAVIRS is run at closing and sometimes other checks to government
data bases. You can be sure the ghosts come out of the closet
Cavirs
is the LAST STEP of the “Quality Control” or QC process (after loan docs are
drawn, signed and returned to the doc dept.).
Lying
will can “sour” Underwriter on a file and may cause them to decline a marginal
loan application even after you signed.
2)
Lack of preparation/ cooperation.
I
am the greatest loan officer when your borrower cooperates with me.
If
buyers aren’t providing information in a timely manner there are usually
reasons why…
Don’t spin your wheels with buyers who have
not gotten preapproved.
Agents
who remaining in close contact me aids to closing on time. As
me to teach you to read a DU and an LP approval. Banks will only have access to
one but as a mortgage brokers I can go a variety of ways.
3)
Buyer’s go out and apply for credit (in anticipation of redecorating their new
home) or make large purchases
I
have seen borrowers who went to Car Max and they purposely run your FICO
fifteen times through every lender that they can to block you from buying a
vehicle elsewhere. Fifteen inquiries in one day can knock your score down one
hundred points.
In
addition to drastically lowering scores, new debt raises debt ratios.
4)
Transferring money around without a “clear paper trail”.
After
9/ 11 the United States government has
strict currency laws about funds in and out of accounts greater than five
hundred dollars that are not payroll deposits.
If
the borrower is receiving gift funds, put the funds into the receiver’s account
ninety days before loan submission. This eliminates the need for a gift letter
(and the giver’s subsequent documentation).
The
problem with gifts is: givers must provide a proof/source of funds (bank
statements) and often the giver resents / refuses to provide banking info. The
gift person has to provide bank statements all pages.
The
solution: Convince the giver to fax banking info directly to the loan officer
so their privacy is preserved.
5)
Liquidation of 401k or IRA accounts.
Borrowers
need to begin the liquidation process inquiry three weeks before the close of
escrow.
6)
Illegible or Unsigned Documents
From
an illegible purchase contract to “blacked out account numbers” on bank statements
borrowers and sometimes agents submit unreadable documents. Borrowers take smart phone photographs of
small items such as driver’s licenses and argue about if they are legible.
7)
Many loan officers simply prefer processing “refi” transactions.
Purchase
transactions are more tedious and require much more attention to detail than
refinances. Escrow must provide accurate fee structure before we disclose, and
they are often under-staffed to gather this information the first day of the
transaction. Home owner associations have become a mousetrap of fees and
misinformation. Banks mostly refuse to get Condominium complexes back on the
FHA approved list because the fines for errors are $250,000 and five years in
jail. A small mortgage outfit will not take it upon themselves to make this
risk. At Eagle Home Mortgage I have in house staff to gather the documentation
and submit to HUD. I share the same break room with Underwriters in our same
office, processing and funders.
8)
Appraisal value comes in low.
With
multiple offers on each property it’s tempting for sellers to choose the
highest offer. If the offer is all (or
mostly) cash; it’s a good choice.
If
the buyer has minimum down and a lack of capacity to make up the difference
between sales price and appraised value there is nothing but to renegotiate
with the seller.
Dodd-Frank
legislation
requires all appraisals to be conducted by an independent appraisal (arm’s
length) service. Loan Officers CAN NOT speak to appraisers.
Appraisals
are to REFLECT current home prices (based only on previously closed escrows) vs.
LEADING home prices (based on future/anticipated close of escrows).
If
the loan is FHA or VA, the appraised value is “set in stone” for at least the
near future (no second appraisal is allowed).
The
best way to avoid a low appraisal is for the listing agent to show up for the
appraisal appointment armed with comparables in hand, and to provide those to
the Loan Officer.
Often
appraisers have their own lock box key (it does speed the appraisal process)
allowing appraisers to bypass the contact with agent. Listing agents do not
give them access to wander in.
9)
Verification of (previous) employment.
Many
buyers working for large corporations must be verified thru automated systems.
If
the borrower has a job change, this process will be repeated if we’re to count
overtime, bonus or commission to qualify.
Some
companies only verify “gross wages” in which case we need to have all the past
2 years of paystubs to count the additional income. Tax returns must not show
employee expenses to match up and use the overtime, bonus and or commission.
10)
Borrower leaves town, takes a vacation or thinks they are all done. The loan
process is no longer simple. More paperwork is always going to be required if
your deal goes past thirty days as the paperwork becomes aged/ old.
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