We have an FHA purchase right now involving a contract that initially indicated that the buyer was an investor. The buyer now intends to “occupy” the property, and the lender is concerned that the change of intent, as “owner occupancy” is a serious issue. So, the lender is asking for an addendum with very specific language, and the Realtor is furious because we have already adequately explained the intent to occupy the property (he thinks). The Realtor thinks just “explaining” is enough.
The lender no doubt believes that our buyer will occupy; the lender’s ONLY concern, however, is padding the file with enough convincing evidence of intent to occupy so that Fannie, HUD or the Investor that buys the loan does not force a “Loan Buy-Back”. A loan buy-back occurs when Fannie Mae (for example) forces a mortgage bank to buy back a loan because some conditions were not adequately satisfied, and it happens often nowadays.
Our point is that “Make Sense” lending no longer exists. Underwriters and Lenders relentlessly ask for ridiculous conditions (e.g. explaining a $1,100 deposit in March) because they are trying to comply with all of Fannie’s and HUD’s ridiculous rules to avoid having to buy back loans. That is all there is to it.
So, we all have to get used to insane conditions until the lending environment changes.
Founder/Broker | JVM Lending
(855) 855-4491 | DRE# 1197176, NMLS# 310167