As my day is finally coming to an end I look back on the days events and some days are funnier than others. Today went from normal to crazy in the blink of an eye. It started out with a panel discussion that I was fortunate enough to sit on the panel. The discussion was how to fund short sales. The answers to the questions traveled from the FHA to some small bank relationships I have built over 36 years. We seemed to find an answer to every specific need. That was pretty normal. Then as Imoved closer to crazy I needed to avert the need for a “desk review” on a loan that was 70 percent of the purchase price. As desk review was being asked for because the underwriter thought that the appraiser brought the value in too high. I thought that rather than have the borrower spend an additional $300 for the review maybe we could have the appraiser lower his value. The underwriter that thought the appraiser was wrong told me that she can not tell the appraiser to lower his price because it was his job to arrive at a value. Okay, call me crazy but if it is the appraisers job why would you tell him he was wrong. finally the day went to full on crazy. I met a borrower who was turned down at three lending institutions. I told him no worries. I can fix that. Like I said, I went to full on crazy. This was a refinance where the loan amount was 50 percent of the appraised value. The borrowers credit score is 736, and his debt to income is 31 percent. So far it doe not get any better than this. His credit report showed that he had been late on his mortgage 6 times over the past 12 months. I provided the underwriter with a “verification of mortgage” showing no late payments. A mortgage history for 24 months showing no late payments, and canceled checks from the borrower for each month the credit report showed him late showing the checks were cashed within the first five days of the month. I added to this list a credit supplement from the credit reporting agency showing there were no late payments. Seriously this should be a no brainer even in 2010. Oh, the borrower is saving money on this loan. The loan failed “Desktop Underwriting” (DU) because the DU reads the original (incorrect credit report) and nothing else. So the investor we chose denied the loan because they claimed Fannie Mae would not buy it.
At the end of the day I did reach someone at Fannie Mae who told me that the investor could manually underwrite the loan. After 10 more phone calls to a list of supervisors we got an approval.
As I look back I would not have believed this was possible in an environment where we supposedly want quality loans. Like I said too absurd to make it up.
interesting post, pretty much covered it all for me, thanks.
Interesting but why wouldn’t the DU verify the loan payment with the bank? Since it was a refi couldn’t the mortgage company verify correct timely payments.
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