That would be stupid –

Today I heard a beautiful phrase come out of an underwriter’s mouth… “that would be stupid”.

In putting together a particularly difficult deal this month, one of the requirements of the loan was that my client had to have 30% equity on one of the properties he owned.

After doing an on-line property valuation, the figure came back at 27% equity.  My mind began to race.  Would this cause the loan to be declined?  Would we have to order a full-blown appraisal and delay escrow by a week?  Would my client have to bring in $15,000 to pay down his existing mortgage.

All of these scenarios seemed ridiculous considering my client’s strong income, assets, and 800+ credit score; however, I was prepared for the worst and was dreading a call from the underwriting desk.

An hour after submitting the the paperwork that outlined the 27% equity issue, I got a call from underwriting and they said – “we signed off on the condition, ordering a full appraisal or delaying the deal, that would be stupid”.

Hearing that an underwriter was willing to waive a condition based on commonsense made me smile all day.

If you have questions, please contact me at TrustYourLender@gmail.com

Credit monitoring strikes again –

Eleven years ago when I started in the business, a credit report would be pulled at the beginning of the loan process and the figures on that report were good for 90 days.

From time-to-time, on a high risk transaction, an underwriter would require a ‘date-down’ on the credit report prior to closing the deal to ensure that no new debts had surfaced.

However, in our current lending environment, an environment which borders on paranoia, lenders are starting to subscribe to advanced credit monitoring services.

These services, without re-pulling the consumer’s credit report during the loan process, will monitor a consumers credit on a daily basis.  These monitoring services are looking for any new debt or duplicate mortgage applications.

If, at anytime during the loan process, the borrower establishes any type of new credit or applies for another loan, the lender will be notified immediately.

In addition to potentially putting a borrower’s deal at risk, each time a credit servicing company notifies the lender of a potential change to the borrower’s credit profile, the deal has to go back through the underwriting process.  At a minimum this wastes 48-72 hours in what is already a very condensed escrow time-line.

As I mentioned here, if you are buying a new home, be sure that you do not apply for any new credit during escrow.  Hold off on buying that new car or getting that 0% Best Buy credit card until after you close on the purchase of your new home.

As always, if you have questions, you can reach me at TrustYourLender@gmail.com

It’s not where you start, it’s where you finish

The Trust Your Lender team started the month strong… but more importantly we are finishing the month strong.

Two more sets of loan docs out and two more on the way by Friday.

Should be a record setting month for our team based on units, loan volume, and number of satisfied clients

Not sure how many times I can say it !!!

I’m not sure how many times I can tell clients the following:

Do NOT apply for any new credit, or make any changes to your credit profile, during the mortgage process.

Do NOT open new credit cards.  Do NOT sign new lease agreements that can affect your credit score.  Do NOT transfer balances from a loan or existing credit card to a new loan or new 0% APR credit card.  Do NOT go buy another house that you haven’t informed your lender about.  Do NOT go buy a new car.  Do NOT go buy a new motor-home.  Do NOT pay any of your bills late.  Do NOT do anything during the mortgage process that can cause your credit score or credit profile to change.

Changes to a credit profile that affect the credit score -OR- the debt load can cause a mortgage pre-approval to be voided.  In rare cases, I’ve seen credit re-checks by underwriting cause an approved loan to be changed to a decline.

I talk about this issue in my very first consultation with perspective buyers.  I have real-estate agents remind their clients about this issue.  “Do NOT do anything that changes your credit report or your score” is written in big bold letter across my new client handout.

Yet, at least once a month I have a deal where a change to the credit report delays or threatens the loan at the 11th hour.

I cannot stress enough how important it for a buyer to not do anything during the mortgage process that could affect his credit score.  Here are just a handful of things that can negatively affect your credit score and put your loan in jeopardy:

-opening new credit trade-line (this includes balance transfers or opening a new department store card in order to save 10%)

-paying a debt late

-closing established credit card accounts

-obtaining a new car loan, personal loan, personal line of credit, home loan (on another property), or new student loan

-increasing the debt load on an existing credit account

If you, or someone you know, is buying a home, please pass this information along to them.  Just this week I had a deal almost fall apart because a client opened a new Nordstrom’s credit card account in an attempt to save 20% off her first purchase.  By doing so, the client established a new credit trade-line with a $1,000 available limit and a $1,000 balance.  This new “maxed-out” credit card caused her score to drop below the 720 FICO which is required for her particular loan product.  In an attempt to save $200 at Nordstrom, this client delayed the escrow on her $500,000 house by two weeks and put the entire deal at risk.

As always, if you have questions, please don’t hesitate to email me at TrustYourLender@gmail.com

30 days to change someone’s life

I still remember a day back in 2003 when I was working at Washington Mutual.  I was already doing loans, but would still help out with operations from time-to-time when the office got particularly busy.

One of the operation supervisors, who was elderly and had a bad back, asked me to help her carry some bags from the vault room, across the public lobby of the bank, over to the ATM room.

My inner Boyscout beamed as a I helped Gloria carry a few heavy bags across the bank and went about my day.

When I realized about 10 minutes later what had just happened, I was kind of besides myself.  What I had just done is carried 150 pounds of $20 bills, roughly $750,000, across a public space and hadn’t even thought twice about it.  Gloria was on her way to refill three ATMs that were running low.  We had just gotten a delivery by three armed guards and they placed the ATM money in the wrong vault room.  Gloria, not able to lift the heavy bags of money, had asked me to carry them for her.

At that point in my career, after having already worked with large amounts of money for three years, the idea of carrying three quarters of a million dollar across a public space didn’t even seem weird.  I didn’t give it a second thought.

It wasn’t until I returned to my desk that I realized I had just held in my hands enough money to payoff my house, my car, my mom’s house, and still have money left over for my sister’s college education.

I write this story as a reminder to myself, other lenders, and real-estate professionals about the levity of what we do for a living.  Working in the real-estate industry we handle the biggest financial transaction that 99% of our clients will ever be involved in over the course of their life.  Sometimes I think it’s easy to lose sight of that fact.

Like me carrying two giant bags of money across the bank… it is easy for those of us in the business to forget about the fact that every deal we work on is the most important deal in the world to someone.  In essence, we hold the keys to the gold that has the power to transform lifes.

By assisting our clients in realizing the dream of home-ownership, we help to create communities, build wealth, and assist in one of the most stressful deals our clients will ever be party to.  If you work in the business of helping clients buy a home… take a step back once in an while and reflect on the responsibility we take-on and how much we affect the long term plans our clients.  Don’t be like I was when I non-challantly carried that bag of money around like it didn’t really mean much.  In the course of a normal escrow, we have 30 days to change a life.  I take that very seriously… I hope you do too.