Last week a borrower came to us to discuss her refi b/c she had lost trust with the lender she was working with (America’s largest non-bank lender).
In any case, she was trying to refinance the house she lived in but it was owned by her Dad and she was not on title. So a refi was impossible – something the other loan officer failed to comprehend – and it had to be structured as a purchase.
Further complicating things were a “gift of equity” down payment, the need for “cash out” for improvements, and the need to avoid capital gains taxes for the seller – all issues that the other loan officer had zero understanding of.
In any case, one of our Mortgage Analysts quickly figured out how to structure the loan and then re-locked the same borrower with the same lender via our correspondent relationship but at a 1/2 percent lower rate.
I share this story not to make JVM the hero but to once again warn buyers away from the big call center mortgage companies.
The call centers stuff bodies into cubicles to do nothing but sell.
Those “bodies” often do not have the skill to close transactions when there is even a small amount of complexity, and… their rates are way higher to boot.
WHEN PRELIMINARY PRE-QUALIFICATIONS FAIL
One more quick story – one of our Mortgage Analysts was working particularly late last week. I asked her why and she said she had a rush preapproval for a complex file.
Curious, I asked her to send me a list of the issues – set out below under “Complex File Issues.” The big banks and the calls centers do preliminary “pre-qualifications” only by looking at W2s, paystubs and credit.
I suspect that would not have been very effective with the below file. The Mortgage Analyst is a highly trained and exceptionally talented UC Berkeley grad, who is uniquely able to tackle files like that on a daily basis.
The call center guys – not so much.
These stories are merely warnings for borrowers and agents alike who think loans and lenders are interchangeable commodities. We get transactions every week that have blown up at other lenders, and it happens b/c the loan officers are simply under-trained.
Complex File Issues:
Married Couple with 3 adorable children, all 5 and under
Income:
Husband:
Full-time hourly employee
Currently receiving intermittent paternity leave (1 day every pay period or so)
This is supplemented with disability pay
He only sent us the current balance, so we are waiting to receive the correct documentation stating how much he is allotted each week
Bonus Income: We are waiting for a VOE to prove how much bonus he has received
25% owner in Family Partnership:
We cannot use any of this income for qualification
Husband/Wife:
Wife runs a partnership
They are each 50% owner and even with $350k in annual revenue, we can only use $1300/year for each one of them due to write-offs.
Rental Income:
Airbnb a room in their house, but we cannot use this because it is boarder income
Purchased an investment duplex on 11/08/2018 in Kalamazoo, Michigan
It is not showing on credit yet because it is still a recent purchase
We are still waiting for the borrowers to provide us with the lease for each of the 2 units so that we can use this income for qualification
Properties Owned:
They own their primary in Castro Valley
They have a primary mortgage and a HELOC on this property
The HELOC was recently paid down but this is not showing on the most recent mortgage statement or the credit report, so we will need the upcoming HELOC statement
Additionally, they were able to pay down the HELOC by doing a cash out refi on their primary
Kalamazoo Investment Duplex
Looking to Purchase:
Investment property in Truckee or Auburn
They will be using the HELOC from their primary for the down payment and some additional stocks
We will need to use rental income, but they and their agent don’t know what to estimate so we are trying to see what the minimum would at least be for them to qualify.
Ratios:
Their front end is low at 33% but their back-end is above 60% while we wait for the VOE and Kalamazoo lease to come back.
