Wouldn't Give that Buyer a Wooden Nickel - Mortgage Loans. I have no wooden nickels but why am I having such trouble for a great 
buyer (great credit) to close a loan?! It can be a LONG mortgage process when a buyer only supplies what they want to give the lender and does not understand the 'full disclosure' route.
When dealing with a buyer who may have only owned a business for less than a couple of years, the double drill down from the mortgage underwriters is tough! Every 't' that is not crossed right, every 'a' that looks like an 'o' must be corrected and even how your mom obtained her wedding ring can be called into question (alright a bit much here).
It is not easy tasks to accomplish and bring a mortgage to closing in a timely manner when CPAs are out of the country (why are they allowed to leave their desks I ask?!) and noone else has the documents or the sharp tongue to put into writing what an underwriter requires...yes, he can vouch for their first and second and perhaps third born, really.
Supplying all documents, paperwork, financials with a business is a must up front from any buyer with a business. No dragging of feet, hissing or moaning allowed. Just DO IT and I'm not even a Nike sponsor but feel like one. I can coach, remind and cheer the client on but I am not the 'doer' of documents for the mortgage underwriters. So they wouldn't give that buyer a wooden nickel? But a complete loan package ready to close is worth a lot more when everyone understands intently on requirements.
Please be aware all home buyers that it is not the same mortgage process of 10 years ago! The mortgage loan world has changed due to many changes and the mortgage underwriters are tough. Many realtors have never dealt with a newer business owner attempting to buy a home and do not understand the intense underwriting process with documents required.
You do want that perfect house?! It is just within reach so heed words all buyers who are new business owners trying to buy a home. It doesn't matter how much money you put down sometimes, the lender wants to make sure you can sustain your mortgage payments when you have a minimal track record of business success ownership. Know it is a tougher road to go on then it once was and be prepared. I do not want to be the only one at a closing. Wouldn't Give that Buyer a Wooden Nickel - Mortgage Loans.
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Ginny Lacey Gorman is a North Kingstown Realtor who works and knows the North Kingstown RI geographic area of homes for sale, schools, happenings, important tidbits of information and businesses well. Waterfront, water view, ocean front, luxury and coastal Rhode Island real estate are her specialty. If your considering Buying, Selling or Relocating to Rhode Island and need a real estate Professional it would be my pleasure to help you! When you are in need of an internet savvy RI realtor® who sells homes in this real estate market, call Ginny today at 401.529.7849
This blog © and its contents is original to Ginny Lacey Gorman
Ginny L. Gorman a purveyor of Fine Waterfront RI Real Estate
Specializing in waterfront, ocean front, vacation, coastal and luxury homes for sale in North Kingstown, South Kingstown, Narragansett, Jamestown, Charlestown, East Greenwich, Exeter, West Greenwich, Westerly RI and beyond ... I sell dreams! because there is no place like home...the RI Realtor in the Sparkly Red Shoes.
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cell: 401.529.7849 office: 401.884.4100 ext.268 Ginny Lacey Gorman, Realtor
Congratulations on the featured post. I had buyers who opened a new subway in my town and were relocating from another town where they owned a subway , the mortgage broker said he could not find a lender because they should own it for two years at the new location. They had good credit and down payment.
Good morning, Ginny.....this is the new world of real estate and mortgages.... I'm sure you'll get this resolved.... it's not like you to take "no" for an answer....
Ginny...full disclosure will happen or the consumer won't get the loan. Some folks do not understand that. Congrats on the well deserved feature.
Gita, isn't it amazing ...here this Subway biz owner had a track record...it is just different now...
Barbara, you are so right!!
Anita, thanks...it is our new world..my son went through the same issues this year since he is a small biz owner but he supplied all info as needed...complained but he got it done timely...plus he owned his business more than 2 years...
Good morning Ginny,
Excellent post! Congrats on the feature..some buyers just don't realize how much the process has changed over the last 10 years..especially for the business owner!
Good morning Ginny. Great title and a terrific blog. It is a new world in mortgages today and a buyer, even someone with a normal job, had better get on board early or say bye bye.
Ginny,
I think now more than ever buyers really need to be qualified and accepted for a loan before we show them houses, it is absolutely frustrating and heartbreaking to everyone involved to get to the closing table and have the loan fall apart. Just had that happen, buyer was employed for less than 2 years on a job where part of his salary was commission, he got a pre-qual but couldn't get approved - even with 20% down.
Tamara
Ginny, buyers often get frustrated, but they have to understand the lender always seems to ask for one more piece of paper. In my business there isn't a lender out there who can't close a loan in two weeks. What they don't tell you is the two weeks starts when they have in their hand that last piece of paper. Its usually the buyer who causes the delay.
Great post. It is difficult for a buyer that just started a new busy to get a mortgage. I had one person that started a new job and they had to wait a year before a lender would take them.
Ginny, not only new business owners, but also those that have been self-employed for a while. The world it is a changin'
Dorie, it is the reality that sometimes just doesn't get through..
Sheila, understanding the constraints from day 1 help...you need to listen.
Tamara, getting pre-approved is mandatory..this one did put up a red flag & we knew it would be tough...it did close but not without a ton of work on it.
Michael, you are so right!
Keith, you are lucky it was only a year...
Ed, it is so important that buyers reveal everything to us up front about their employment.
Good morning Ginny -
You nailed it. I preach disclosure, disclosure most get it others well they learn the hard way. I hadn't thought of the saying "Wouldn't be worth a wooden nickel" in years. I may have to start using that one again :) Congrats on the Feature my friend.
John
Good Morning Ginny, great post. There will always be people who feel they can skirt around disclosures. If you want a house if you want a loan if you want to sell then disclose everything. On the rare occasion something might slip by but in the long run you will lose.
In a bank loan with lots of eyeballs passing over the "i's" and "t's" means delay. The longer the trip to the long real estate closing table, the more chance of life events outside the purchase derailing the closing happening all together. And it's back to the drawing board, real estate buyer fish tank.
Ginny, I had this happen a few years ago with a buyer. They had excellent credit and lots of money but they hadn't filed their tax returns in two years (I'm told that happens with lots of people who make a lot of money). Anyway, we were right down to the wire. Their accountant hand delivered documents and we were able to close but it was a nail biter for awhile.
wow, this is the second time today that i'm going to sound like a lender.
self employed borrowers are tough, even when they meet the guidelines. self empoyed borrowers who don't meet the guidelines and are looking for this type of exception, less than 2 years, are REAL TOUGH, or frankly not lilkely to get a loan.
in the underwriters eyes the stability of income has not, and possibly cannot be established, and these loans have a high rate of default.
let me propose a question; it's your career (being an underwriter) how many of thse loans are you putting your signature on?
I have two closings being delayed by credit or reporting issues. It is getting more difficult to obtain a loan these days no matter who says.
Can't be said enough. Not only is the process wildly different than 10 years ago, it is drastically changed from 10 months ago. The insanity is still very much in full swing and it's our job to help our borrowers get through it. There's little else we can do until the madness stops.
Thanks all....i want buyers to truly understand that is the 'REAL WORLD' we live in when you are not purchasing a home with all cash...new business or not it is different from when you bought your last home...
It is good to remind your self that the loan officer makes a living doing this...if it can be done, it will be done and they know this
I have had some really odd scenarios lately too. I just had a young doc need to get owner financing as he was just too new to get a loan..even with 30% downpayment.. nope.. not this year.. work for a while then get back to us was what they were told.
Hi Ginny,
I'm sure glad I'm not involved with all this lending stuff.
Sounds like a big headache.
Have a good day in North Kingstown, R.I.
Best, Clint McKie
Ginny -- oh for the days when a short meeting and handshake at the local bank was all that was needed to get the mortgage loan. Now, it seems, there are changes to the forms required, or timelines provided - nearly every other week. All any of us can do is keep on keeping on - and get every form the U/W ask for, ASAP, so things can continue to move.
Ginny -- BTW -- I seem to remember seeing a couple wooden nickels when we were cleaning up all of mom's stuff recently. Now if I can just find one of those "plug nickels".
Richie, you are so right...they are not the boogey man.
Janis, so true..i've had doctors who couldn't get the loan with 33% down...need another year...
Clint, you have your own headaches as an inspector
Steven, I hope you send me one if you find it!! good luck
Ginny: You are my new hero, no doubt about it! You sum-up the process perfectly. In today's lending world, it's all about documentation and COMPLIANCE. You either give the Underwriter what they want, or you get no loan. It's that simple. No fussing, no fuming, no gritchin' will change it. Fighting and trying to buck the system does NOT work. I know it's frustrating for clients to understand. Frustrating for referral partners. Heck it's frustrating for me too .. and I'm a Lender. But it's the way it is. Comply ... and the chances of Closing on time increase. A great post ...
Gene
"Please be aware all home buyers that it is not the same mortgage process of 10 years ago!"
This is so true, that it bears repeating many times. Many are caught off guard by the new process. Great post
Buyers need to understand that we did not get here by chance...there are reasons the banks require additional documentation. Sure, it has swung a bit into the land of the absurd but they are reacting to results of previous lax standards.
Thanks, Ginny. It's true. Today I was on the phone with a self-employed borrower who had a loss on their tax return last year. It's probably a no go for now. Thanks again!
Paul
Great post Ginny, congrats on the star! You hit the nail on the head, it is so difficult for qualified buyers to get a loan now. As usual the pendulum has swung too far in the opposite direction over correcting for the lack of rules a few years ago!
Ginny it use to be even up to a couple of years ago that an LO took a full mortgage application, and ran the it through Automated Underwriting. If you got an Approved/Eligible, all the Underwriter did was verify the documents that were required and if everything was correct the loan was approved.
Now the Approved/Eligible is still needed but it does not carry the same weight that it did. Now you have FHA, Fannie Mae, Freddie Mac, VA, and USDA guidelines that have tightened up, but there are also Investor Overlays that were not part of the process before, as well as PMI Companies getting tougher.
If that is not enough, verification of bank assets have gotten ridculous. It use to be that you did not have to explain a deposit or withdrawal that was less than $1,000. Now you have to explain every single deposit and withdrawal that can't be identified as to what it was for on the statement.
This is because Lenders are getting loans back that they Underwrote 5, 6, 10 years ago, that are being foreclosed on. When a loan goes bad FHA, Fannie Mae, Freddie Mac, VA, and USDA go right for the bank statements, and if the Lender can't explain a deposit or withdrawal (that did not require an explanation) when the loan was Underwritten, it gets sent back to them, and they now own an insured loan. If you get enough of these back, you end up like Countrywide.
That is the reality these days, so yes all applications need to be explained, explained, and explained some more. We don't like it any more than the Borrowers do.
I truly also wish it were different but it is not for borrowers and they need to be very strong, employed for years and can put their first born up too...I want borrowers to understand it is not the realtor and not the mortgage officer but everything behind that mortgage system that has locked things down so much...we keep on truckin in real estate! many thanks for great comments,
Clearly the pendulum has swung the other way. Many argue that the loan pendulum has swung too far. Getting a loan is often very challenging for well qualified candidates.
Hi Ginny,
This is a great post, congrats on the feature! Keep up the good work as a top North Kingstown short sale agent!
Ginny, isn't that the truth! Some buyers still have no trouble, but if you are self-employed, have a break in work history it can get a bit more complicated! Great post!
Having been a Business Owner for about 35 years, I can testify how tuff it is for us "Bosses" to get a loan, of ANY kind. I had a minimum wage worker for me get a loan easily at a local bank, yet the same loan officer turned me down for a similar amount. My worker was "assured" of a paycheck, whereas I was NOT.....Wait, what if I fired the guy? Where his "assurance" then!!! I, at least, had a quarter million dollars of PAID for inventory!!
This area is a haven for retired military, and ones (like me) who didn't retire, but stayed here. The retirees have their own income, but those who just stay, have to "start over" on the job length-of-time. Since many of these people actually are doing the very same job (even at the same desk), but as a civilian rather than military, it seems pretty silly to me. But, those are the rules!
Great post and a well-deserved featured spot. No matter what the buyer's background is, best to prepare them for requests from the underwriter the buyer may consider unreasonable. I tell them, don't question it, just give it to them if you want the loan.
For the reasons George (#31) stated-- Every underwriter, from every lender, is (effectively) looking for a "PEFECT" Loan file Every time.
Stubborn borrowers-- who are also Self-Employed-- certainly make that quest for Perfection a challenge.
Sorry for your frustrations... Great post though.
How about an aluminum dime?
Requirements are becoming very strict, and lender underwriters are looking at very little items. Just had an underwriter change the approved loan amount by...$500.00.
Setting the right expectations up front is paramount now days.
Get ready to enter the gates of Hell....
hehe maybe not that bad, but for some close to it.
Please keep in mind Loan Officers; processors and underwriters are only foot soldiers.
We only get what we are told to by FHA; VA; FNMA; Freddie and the investors (they are the EVIL ONES)!
Good Post!
Ginny, great job and thank you for pointing this out. None of us enjoy having to ask for more documentation and information. But we have to or the loan can get denied.
I do believe that we don't just have to discuss this with a client up front but along the process especially if it takes them many months to find their dream home...how quickly things escape our minds ....thanks
Ten years ago? How about 3 years ago? Things have done a complete 360 in the loan world & buyers should just get with the program. Being 'miffed' at the intrusive process is ridiculous. The bank has to be sure that you can make the future payments.
Ginny:
No matter how often we are asked for the same document by the lender, provide it ASAP. Things have change in the lending industry. They have stricter requirements. Buyers must realize it is not worthy balking about the current requirements. If they want a loan they have to comply.
Hi Ginny, we agree. Have had several deals fail lately due to the double and triple drill down by the underwriters.
You can ask for all the documents in the world and great credit to boot, but in my opinion good character is what counts when it comes to honoring your debts when the chips are down and your mortgage turns upside down. Far too many people who look great on paper walked away from their debts these last few years because it looked like a "sound financial decision".
I agree that changes needed to occur in the mortgage industry, but I think in some cases they've taken it too far by asking for far too much documentation. They're not only made it hard for people with bad credit to qualify...they've made it hard for those with excellent credit also. Hopefully things will loosen up a little real soon.
Hello Ginny,I'm loving this post! Congratulation for the feature.Just want to wish you the best on your business and stay top notch North Kingstown Short Sale Agent.
When I first started in 1985, the process was long and laborious. Now it is just crazy ridiculous! Besides, what bank wants to potentially tie up their money at 3.5% for 30 years? NONE of them. It is no wonder they are so hard to deal with, but we have compensated them with bailout money quite sufficiently that they should just do what they are there to do and quit all of the shenanigans.