And – the entire situation is a great lesson on why Bay Area buyers should not go to a warehouse store to get a mortgage. :)
Appraisal Issues: They used a national appraisal management company and the appraiser called for a termite report even though the property looks great. This alone killed the deal b/c the report calls out Section I work and the seller refuses to do any repairs.
Pre-Approval Issues: They “pre-qualified” the borrower without doing a full pre-approval, but debt ratios are very tight and they missed deal-killing issues.
Issue #1: Borrower is an hourly wage earner and they assumed the borrower works 40 hours per week. He doesn’t. They should have obtained a full “Verification of Employment” from his employer.
Issue #2: The borrower is buying in an area with a very high property tax rate that pushes his ratios out of range. We know and check property tax rates for every Bay Area city; warehouse store lenders don’t.
Warehouse store mortgage companies can perform for very strong borrowers, with very simple income situations, and very simple appraisals.
But, that combination rarely exists in the Bay Area, or any area for that matter.
Many borrowers treat mortgages like commodities and think they can go to online lenders or warehouse stores to just simply “get a loan.” There is, however, far more to the process than borrowers realize, and experience in local markets clearly counts.
We encourage Realtors to share this blog with their clients who might think mortgages are commodities.
Jay Voorhees
Founder/Broker | JVM Lending
(855) 855-4491 | DRE# 01524255, NMLS# 310167
