Tuesday, January 13, 2009

4 Loans We're Doing

We're often asked how business is going. Here are four loans we're working on now:

1) The borrower was well qualified except for a debt-to-income ratio that was too high. He was able to get a gift from a relative and pay off the debt (a furniture loan and 3 credit cards) and then he qualified for an FHA loan. FHA guidelines allow a borrower to pay off debt to qualify.

2) The borrower had a debt-to-income ratio that was too high on this deal also. While reviewing the credit report with the borrower, we discovered that two of his debts (a car loan and a student loan) were actually being paid by his son. All we needed as proof was 12 months of cancelled checks showing that the son was paying the debts and Fannie Mae allowed us to remove those debts from his liabilities.

3) We ran this third loan through Fannie Mae's automated underwriting system and it did not get approved. However, we added one month's reserves (one times the principal, interest, taxes, insurance, and mortgage insurance) to his assets, and this time it was approved. We then called the borrower and asked him if he had any assets he didn't think about the first time we spoke to him. It turned out that he had an old 401(k) from a job he left 5 years ago that he forgot about. That was all we needed for the approval.

4) The fourth borrower did not have a high enough credit score to qualify 3 months ago. We ran his credit report through the software we use to determine exactly what must be done to increase scores, and it told us to have him pay down the balance on two credit cards by about a thousand dollars. He paid them down, and we re-ran his credit. This time, the score was high enough for him to qualify. We charge nothing for the use of the software, by the way.

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