Lenders Continue to Ask a lot of Mortgage Applicants

Borrowers need to prepare for items asked of them that seem “out of the ordinary” when going through the mortgage process these days. As the recession drags on and the flow of credit and money continue to tighten, so do the lending guidelines tied to mortgage applications. Gone are the days of the No Income No Asset, No Doc and of course the coveted 100% Zero Down loans. I get a lot more sleep at night knowing those mortgage products aren’t floating around out there any longer, but every day it becomes increasingly more difficult to fulfill lender guidelines.
In hearing from a fellow mortgage broker in the business, he was commenting on a loan approval he just received back from the lender. The approval contained 46 loan conditions that needed to be fulfilled in order to close the loan. 46!!! Three to four years ago you could have turned in a blank loan application to a lender and you wouldn’t have received 46 loan conditions! The first condition would have been: What is your first name? The second would have been: What is your last name? And so on and so forth. Lenders typically bundle their funded loans and sell them on the secondary market to investors. Well, with a damaged secondary market, lenders are extremely fearful of running across any loans on their books that they cannot bundle and sell to these investors. The inability to sell these loans keeps them from turning around and using those funds to fund new loans and thus the cycle. That is how we have the issues we are seeing today: extremely touchy underwriting.
Your mortgage broker is NOT trying to make your life miserable when they ask you for items that seem off the wall. My advice is to take a deep breath. Relax. Take it all in stride. After all, this apparently is all in the name of good underwriting practices and closing your mortgage loan.
Heck, at least you’ll be able to chat around the water cooler with your co-workers and say “So I’m buying a house and you’re not going to believe what my lender is asking me for…”