< Back to JVM's Blog

Irrational Underwriters – Unforeseen Conditions – Loan Buybacks – Paranoia

We take great pride in our ability to spot issues up front. BUT, unfortunately, we operate in an era of underwriter-paranoia. The reason: Fear of Loan Buybacks. Major investors and Fannie and Freddie all can and do demand “Buybacks”; they can force the lender that originally funded the loan to buy back a loan if there is something wrong with or missing from the file. These “flaws” in the files (that force buybacks) can be very trivial and arbitrary. In addition, Buybacks are very costly to the funding lender. It is b/c of this atmosphere that underwriters can be so demanding and sometimes irrational (underwriters get blamed for the Buybacks).

This is why conditions pop up all the time that sometimes kill deals, and often seem irrational; issues that nobody foresaw. Examples include (1) questioning owner occupancy; (2) defending horrific appraisals; (3) forcing buyers to explain and source tiny deposits that show up on 3 month-old bank statements; and (4) requesting permits for the most trivial of structures, such as a small patio cover. We have had deals delayed and/or killed altogether for all of these reasons.

Our point: We do our best to spot issues, but sometimes “conditions arise” that we just cannot foresee.

Jay Voorhees
Founder/Broker | JVM Lending
(855) 855-4491 | DRE# 1197176, NMLS# 310167