With the changing face of the mortgage industry it is somewhat hard to keep up with the constant changes. I know that I have had guidelines change mid-stream resulting in a client not getting the home of their dreams. Well, thanks to John Karadsheh, I now understand the guidelines completely that are about to be rolled out so I though I would help you all out and share them with you.
Please read up so you can assist your clients the best you can and prepare them!
New Underwriting Guidelines effective 4/1/10
* Verification of deposit will be acceptable only if Bank representative is present at the closing. (witness required to ensure authentic funds are made)
* Copy of Pay stubs and W2 will only be acceptable through IRS only with a wax sealed envelope mailed directly to the lender. (to ensure it’s the official documents and not tampered)
* All Borrowers’ Birth Certificates will be required with Pictures taken in the hospital with medical staff. Birth certificate with a live home delivery will not be eligible for first time home buyers. (to prevent fraudulent activities within the lending industry)
* Marriage certificate with bridal dress will be required if both husband and wife are required to qualify for the loan (if bridal dress is a rental, a receipt of rental is required)
* GFE will not require signature but will require blood sampling from a recognized institution within three days of application (as part of the new mandate from the Patriot Act)
* DNA test will be performed at closing to avoid any non-ARMS length transaction. Loan funding will be contingent upon satisfactory receipt of DNA results. (this preventive measure is to ensure that families are not selling to their own blood relatives for short sales)
* 7 Witnesses from neighborhood will be required as proof of primary residence in case Borrower owns more than 1 property. (preventive measures to deter falsification of 1003 loan application)
* All appraisers will be required to use Mask and ear plugs at the time of inspection to avoid any personal influence by the Borrower for the appraised value. (as part of the new rules adopted under HVCC)
* In order to correctly calculate DTI and true house running ratio a list of Grocery items, monthly usage and brand names will be required with receipts and projected 12 months consumption chart. (as a means to accurately track expenses should homeowners apply for a loan modification)
* Closing will not occur without loan officer presence at settlement and Loan officer picture will be taken at the closing in a Mug shot format with loan number. Picture should meet standard guideline of 2 X 2 inch in color format with one facing and one side view. (to discourage fraudulent lending activities for added measures)
* Loan officer picture will be attached to the Deed and note and will be made available for general public and security agencies in case Borrower defaults on the loan. (holding loan officer/mortgage broker accountable should buyer default on the loan)