MortgagesUndressed

If you are securing a conventional fixed rate loan, the shopping is pretty simple. However, when you get into the “nontraditional” loans your neck is sticking out a mile.

Don’t misunderstand my point. There are good reasons for these other products, that is why they exist. You just may not need or want one.

The most flagrant example I have seen came from a manager I once had. He was also a loan officer. By the way, I quit a few days after learning this was what he was like. He would use any excuse to move someone to a higher rate, claiming he had to go to a special program. The most sinister example was a credit blemish. The unsuspecting borrower would be told their credit caused them to have to go to a subprime loan. Credit blemishes don’t always result in denial. Your total loan package is reviewed by automated underwriting. It amazed me at times, at just how lenient it could be.

I could go on and on about this topic, To make it easy for you, any time you are told you have to go to an exotic loan, be suspect. Ask for a copy of the automated underwriting denial. It may even be innocent, the input to the system could have had an error in it. For example, I once an underwriter from a major mortgage bank deny a loan I had submitted. I new it was to be approved, I had done my own LP or DO, the initials they use for automated underwriting. I asked her to go through her computer input an item at a time. She had left out a 0 in the asset colulmn. My borrowers had $100,000 in liquid assets, not 10,000. It was the difference.

Always be willing to second guess when you are told you don;t qualify, or that you must go exotic.

Larry Cragun