Silly Underwriting Requirements

2 Replies

I am in the process of doing a cash out refi, and got notified by the lender that I will need to provide a hand-written letter (not typed, in my own handwriting) listing the properties I currently own and stating that I am not in the process of acquiring additional properties at the time of writing.  

It's not a big deal, but seems a little ridiculous to me.  As long as my signature is on the letter, what difference does it make if it is typed or hand-written.  Also I'm not sure why they require me to not be acquiring any more properties if I can afford it financially. 

At least this is better than the underwriting done for NINJA loans.  Anyone have similar experiences?

@Bryce Y.   While I wish I could be more helpful, but I share your concern that certain requirements instituted by lenders, licensing boards, whomever, are often over-the-top and overbearing.

For example, I was recently renewing my real estate license, and the licensing board required something that was, literally, not even in the formal regulations. Not only was it not required, they had literally made it up as a requirement!

The best thing to do in situations like this is to simply grin and bear it. Someone, somewhere, created a silly requirement. Either “play their game their way” or work with another lender. While I don't do it often, I occasionally take such senseless requirements as a “free” way to find out that the vendor is not going to be a good fit for me. I then simply move on to another vendor.

Typically they'll want a handwritten letter from you because most of the time when letters are requested, the sales officer will "prepare" them. 

As far as acquiring new properties, lenders want to see that your financial situation is stable or improving.  Taking on additional rental properties means more risk.  The less risk, the better.  The last thing a lender wants to see is someone that is taking out all their equity to purchase additional properties (debts).  They probably wanted to see what the cash out would be used for.  My advise is to state that it will be used for other investment opportunities, but not specifically stating that you are buying a rental.

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