Loan officer messed up?

West Haven, CT · Member since 2019 · 24 posts · 13 votes

Hey guys I'm not sure how to handle this situation. Monday I'm closing on my first rental property. I'll be profiting $1000 each month after expenses. I'm super excited. The problem comes with the rental property my spouse is buying. We just had the appraisal done and our loan officer is telling us she doesnt qualify for the house due to her vehicle lease. Why is this coming up now? (Maybe because the loan application was submitted and the underwriters brought up the issue) we already did the inspection and appraisal so that will be money lost. The only option we have to make the deal go through is to turn in the car and pay the remaining payments plus lease termination fee. This is not an option for her.

I dont want to blame anyone I just want to correct the issue and get the deal done.

Any ideas?

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Wayne Brooks

Real Estate Professional · West Palm Beach, FL · Member since 2012 · 23k+ posts · 13k+ votes

Happens all the time.....your loan officer does a sloppy job, or You don't supply All relevant info....in the end when reality surfaces, you get denied. There is no saving it now, if her DTI is too high. On the other hand......Is the loan officer counting the expected rental income?

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Wayne Brooks
Real Estate Professional · West Palm Beach, FL · Member since 2012 · 23k+ posts · 13k+ votes
6y
Happens all the time.....your loan officer does a sloppy job, or You don't supply All relevant info....in the end when reality surfaces, you get denied. There is no saving it now, if her DTI is too high. On the other hand......Is the loan officer counting the expected rental income?
5 Reply
Theresa HarrisPro Member
Member since 2019 · 15k+ posts · 11k+ votes
6y
@Benjamin Greene Is it only her name on the loan for the rental? Could they either add your name or could you transfer the car lease to your name?
3 Reply
Benjamin Greene
OP
West Haven, CT · Member since 2019 · 24 posts · 13 votes
6y
@Wayne Brooks yes she is including the rental income but from what I understand she can only include a percentage of it. One unit is renting for 1650 and the mortgage is 1300.
1 Reply
Benjamin Greene
OP
West Haven, CT · Member since 2019 · 24 posts · 13 votes
6y
@Theresa Harris yes it is only her name on the rental. I can ask about adding mine. Called the leasing company and they said it cant be transferred since her father cosigned with her on it. I'm going to see if it's possible her father just take it over.
1 Reply
Jonathan GreeneBusiness Member
Real Estate Consultant · Madison, NJ · Member since 2016 · 6k+ posts · 7k+ votes
6y
When did she start leasing the vehicle? Many times it is not the loan officer's fault, but the client as you can not take out ANY loans while your home purchase is in process. If she leased the car after the initial loan docs, it is on you guys. If the lease was already pending, they should still be able to turn it back to you as it should have been disclosed. Most times the car has to be turned in if the lease was taken after the loan paperwork was generated.
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Benjamin Greene
OP
West Haven, CT · Member since 2019 · 24 posts · 13 votes
6y
@Jonathan Greene she's had the car for 2 to 3 years already. It was disclosed. It's her biggest liability. She doesnt pay anything else really besides insurance. That's why I cant figure out how this mistake was made. She has given bank statements and all other information asked for. I think we are going to turn in the car, pay the fee and go with a rental for a month until we can close.
2 Reply
Theresa HarrisPro Member
Member since 2019 · 15k+ posts · 11k+ votes
6y
@Benjamin Greene If she had it for 2-3 years and the loan office had the paperwork, I'd ask to talk to their boss and see what happened.
1 Reply
Benjamin Greene
OP
West Haven, CT · Member since 2019 · 24 posts · 13 votes
6y
@Theresa Harris this officer is the same one who worked with me on the house I'm closing on monday. She has been great up until now. What can I achieve by speaking with the boss? Is it possible the loan can get pushed through? I just want to get the deal done. If we cant proceed then maybe I can get refunded for appraisal and inspection since we shouldn't have gotten to that point in the first place.
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Jonathan GreeneBusiness Member
Real Estate Consultant · Madison, NJ · Member since 2016 · 6k+ posts · 7k+ votes
6y
@Benjamin Greene your loan should be able to go through as long as it was approved with the loan and it was fully disclosed. It doesn't make sense that they would try to bounce it now when you had it on there the whole time. I too would go over her head. Why turn in the vehicle if you don't have to? But on reading it more closely, it's not the property closing Monday so maybe it was during their due diligence that they bounced it. Still, you should not have gotten a loan approval upfront if the car loan would be an issue in underwriting. I can't tell the timeline, but there is a chance the loan officer did not make a mistake and that underwriting for this company is where the final say is made on outstanding loans like that. What did the loan officer have to say?
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Benjamin Greene
OP
West Haven, CT · Member since 2019 · 24 posts · 13 votes
6y
@Jonathan Greene Me and my GF are buying two separate properties separately using the same lender. I am ahead in the process and closing on my property on monday. My GF is at the point where we just got the appraisal back. I'm guessing that when the loan application was sent to the underwriters they bounced it due to the car lease and DTI. When I spoke to the officer she said we have to get rid of the lease which I've been brain storming how. Recently when i spoke to the officer again she's starting to saying things like "it's in my notes that I told you about the lease" and other things trying not to take blame. Never in writing or verbally did she say my GF does not qualify for the property. If she didnt how could we even get this far? If this happens often to people then that's a huge waste of time, money and also insane.
1 Reply
Corey Hawkinson
Rental Property Investor · Bloomington, MN · Member since 2019 · 404 posts · 542 votes
6y
@Benjamin Greene I would suggest sitting down with the loan officer and trying to focus on what options you have to get the deal closed. As someone else mentioned, ask if including you on the loan would get this approved. They already have your information so that should be easy to tell. Ask how far you are away from an approval, because there might be other options including paying a little more down on the purchase. (This option would only work if you’re very close because a few thousand amortized over 20-30 years barely decreases the loan payment.)
I’m not opposed to going to the boss, but I would go back to the loan officer first.
2 Reply
Benjamin Greene
OP
West Haven, CT · Member since 2019 · 24 posts · 13 votes
6y
@Corey Hawkinson I cant go on the loan because they are both owner occupied loans for the first year.
0 Reply
Benjamin Greene
OP
West Haven, CT · Member since 2019 · 24 posts · 13 votes
6y
@Corey Hawkinson thanks for the other information I will ask the loan officer to see what we can do.
0 Reply
Amy H.
Rental Property Investor · Richmond, VA · Member since 2017 · 295 posts · 229 votes
6y
@Benjamin Greene I'm confused. How are you profiting $1000 after expenses on yours if it's owner occupied? Is it a a SFH or duplex or multi? I'd be careful trying to call out a loan officer if either are you aren't actually owner occupying the homes (mortgage fraud).
3 Reply
Benjamin Greene
OP
West Haven, CT · Member since 2019 · 24 posts · 13 votes
6y
@Amy H. Apologies I should have been more specific. That's after the first year and with all units rented out. That's how I run my numbers. With me in one unit I'll be breaking even. Same with hers. I'll still be saving a ton of money from my job income, it's a win win.
0 Reply
Theresa HarrisPro Member
Member since 2019 · 15k+ posts · 11k+ votes
6y
Originally posted by @Benjamin Greene:
@Theresa Harris this officer is the same one who worked with me on the house I'm closing on monday. She has been great up until now. What can I achieve by speaking with the boss? Is it possible the loan can get pushed through? I just want to get the deal done. If we cant proceed then maybe I can get refunded for appraisal and inspection since we shouldn't have gotten to that point in the first place.

If the loan officer dropped the ball, then it is up to them to tell her what the problem is. She gave them the information and the loan officer appears to have messed up. Based on your other post, the loan officer is now playing the blame game. If she can't admit to her own mistake, going to her boss with either get her to own up or let her boss know that she messed up.
0 Reply
Jonathan GreeneBusiness Member
Real Estate Consultant · Madison, NJ · Member since 2016 · 6k+ posts · 7k+ votes
6y
@Benjamin Greene you should definitely ask for a supervisor if they can't resolve it with your loan officer. It should not have gotten that far when you disclosed the car loan on the initial application. You want to try to force them to close the loan so you don't have to dump the car. Super frustrating.
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Bernie NeyerPro Member
Investor · Chanute, KS · Member since 2016 · 160 posts · 60 votes
6y
It's not the loan officer's fault, it's the guidelines they've set up, and it's unlikely you'll persuade them to proceed with the loan
Several things may be occurring. Your wife's total mortgages may exceed 40% of her stated income. Banks won't loan if you're over leveraged. They see all vehicles leases as a loan, since when the lease expires, usually the leasee buys the vehicle outright.
Due in part to the number of loans you have, your FICO score may have decreased some and they view her as a higher risk, regardless of income.
The bank may be running your numbers and don't think your ROI is accurate. They may think your numbers are too rosy.
The officer may be only looking at the face value of the loan and not the remaining loan balances.
I don't know what your equity is in your properties, but you may be able to cash out your present mortgages and purchase the property in question.
Another option is to talk to the seller about seller financing.
1 Reply
Craig Jeppesen
Rental Property Investor · Chubbuck, ID · Member since 2018 · 532 posts · 466 votes
6y
Why would you even apply for a loan of your dti is too high? Underwriters make the decision not your loan officer.
0 Reply
Michael Noto
Real Estate Agent · Southington, CT · Member since 2008 · 5k+ posts · 3k+ votes
6y
@Benjamin Greene You have gotten some sound advice regarding the lending aspect of things on here already, but as a whole I think it is a very good strategy for both you and your significant to house hack separate owner occupied properties. Good thinking on both your parts. I hope you are able to figure something out with the loan and move forward. Best of luck.
3 Reply
Benjamin Greene
OP
West Haven, CT · Member since 2019 · 24 posts · 13 votes
6y
@Craig Jeppesen exactly why would I... I was told by the loan officer she qualified for the loan. I wasn't just reaching for the stars here.
1 Reply
Benjamin Greene
OP
West Haven, CT · Member since 2019 · 24 posts · 13 votes
6y
@Michael Noto thank you michael that's exactly what we are trying to do. It's a messed up situation but I'm not willing to give up.
0 Reply
Benjamin Greene
OP
West Haven, CT · Member since 2019 · 24 posts · 13 votes
6y
@Bernie Neyer thank you. I appreciate the information. I didnt think about that last option.
2 Reply
Michael Noto
Real Estate Agent · Southington, CT · Member since 2008 · 5k+ posts · 3k+ votes
6y
@Benjamin Greene That's a great attitude to have and the ability to think creatively to solve problems is a skill that will serve you very well in this business.
3 Reply
Oleksandr IvanovskiyPro Member
Rental Property Investor · Member since 2019 · 124 posts · 38 votes
6y
@Benjamin Greene
Wow. What a bummer. Maybe you can show that she uses a car to produce income I.e driving for Uber. It turns it from liability to income producing asset.
It just a thought of cause. Or maybe you can move it to LLC if you have one.
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