This isn’t supposed to be happening but

Mortgage lenders are still bending the rules.  I don’t know if on purpose or just mistakes but the rules are being stretched.  Yes not as badly as before.  But the underwriting rules are still being broken.

Yes almost all of the banks and lenders have closed the loopholes of the past.  Gone are sub-prime loans.  Gone are getting the a loan after one year out of bankruptcy.  Gone are stated loans where self-employed people could get a loan without showing any income documentation.  Loans have gotten tougher.  Much, much tougher.

But some rules are being stretched to get loans done.  I don’t know how they are getting done but they are.

No credit scores or credit scores below 620:  My clients recently closed a loan when one of the borrowers had no credit score and very little credit history.  The other borrower had credit history and a decent credit score.  They were turned down by a local lender but Di-Tech was able to get it done.

High Debt ratios:  I had one loans close where the loan officer told me the back end debt ratio was 51% on a FHA loan.  I was worried that the buyer couldn’t afford the house.  I told him not to go that high, but he wanted the house and the loan officer some how got the high debt ratio done.

Owning another house.  You aren’t supposed to be able to buy another house and be able to walk away from the first.  Fannie Mae put in a rule that you can’t use a lease to off set the first house payment if you don’t have 70% equity in the home.  But I have seen two different buyers walk away from homes when they had no equity in the home.  One did get turned down by another lender.  But they got loans anyway.  One was a FHA loan.  It was two different lenders so it is being done.

Over 6% sellers concessions.   Yes you won’t believe it.  One of my last buyers that closed this month got over 6% seller paid concessions.  We had 6% concessions in the contract that were paid and then the seller gave some tax pro-rations too.  How that got past a lender and underwriter I don’t know.  They even approved the HUD.  So it got past at least two people at the bank.

I can’t believe some of this stuff is being done but it is happening.  And if it is happening here in Michigan it is happening across the country.  Feel free to call me with any questions.

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