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“Overlays” Lurk Everywhere; Why They’re Bad For Realtors/Buyers

We interviewed a loan officer last week who had to “give away” three loans over the last 60 days to other lenders b/c her own internal mortgage bank could not fund them. This was painful for the loan officer (b/c she had to give up commissions and a lot of work), and shocking to us b/c we could have funded all three deals easily.

The loan officer’s mortgage bank has “overlays” or conditions that are stricter than what Fannie and Freddie require. Examples of “overlays” include debt ratio caps, credit score caps, extra seasoning for major credit events, required “landlord experience,” and not allowing the debts to be paid off to qualify.

We have numerous lending sources that are straight Fannie/Freddie with no overlays at all. This is extremely important. If we cannot fund a loan, nobody can. All too many lenders continue to tangle with unnecessary overlays.


Jay Voorhees
Founder/Broker | JVM Lending
(855) 855-4491 | DRE# 01524255, NMLS# 335646