Mortgage Rules: Currently A Moving Target

If you have owned a home in the last 20 years or so, the process of getting a mortgage has remained relatively unchanged. You meet with a loan officer (either in person or over the phone), you supply your financial information to him and once he has your financial information, he can tell you whether or not you qualify for a loan.

In the past, the loan officer was able to tell someone “yes, you qualify” based off of the lender guidelines that were published for loan officers. In short, if a loan met guidelines for a particular loan program, then it was safe to assume that the lender would make the loan.

In today’s world, this is not necessarily true anymore.

I am personally working with more than one borrower who meets the guidelines for a certain loan program and when the loan gets to the lender, the lender denies the file or asks for more information about the file that is not disclosed in the program guidelines.

Translation: if your loan officer tells you “you are approved” before your loan is actually through the underwriting department, do not be surprised if it is denied/suspended for reasons that your loan officer could not predict ahead of time.

There are little tricks that your loan officer can do to mitigate this risk, but lately I have been seeing multiple lenders refusing to underwrite to guidelines for whatever reason. So if you are in the process of buying a home, be aware that anything can happen up until the loan funds. If you are a Realtor, be sure to prepare your clients for the possibility that even though they have great credit, low debt and are putting “a bunch” of money down – anything can happen.

And if you are a loan officer, well… you already know what I am talking about.

Phoenix Mortgage Rates May 8 2009

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Tagged as: Insanity

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