Whats the strangest thing an underwriter has requestedof you?

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Whats the strangest thing an underwriter has requestedof you?

Joseph Weisenbloom
Investor · Austin, TX · Member since 2013 · 443 posts · 174 votes

As real estate investors we fight the constant battle of getting approved for funding. Collecting paystubs and W2s seem pretty reasonable but then there are other requests that leave you scratching your head.

My recent favorite is "we need a witten explanation how you have bought so many houses with it signed and dated at the botrom"

Share your most rediculous underwriter requests.

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Aaron HowellBusiness Member
Real Estate Agent · Crozet, VA · Member since 2014 · 436 posts · 223 votes
10y

I had to write a signed statement stating that I wasn't married to my mother (we own two properties together) and that she was my mom and not my wife.

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  • Bryan O.
    Specialist · Lakewood, CO · Member since 2014 · 1k+ posts · 1k+ votes
    10y

    I bought a 3-unit to owner-occupy one and the underwriter got confused on where my work location was vs. where the company's HQ was. I had to write "a strongly worded letter" explaining why I would be willing to increase my commute by so much. My letter basically said "because it's 5 minutes closer at the new property"   :)

    1Reply
  • Joseph Weisenbloom
    OP
    Investor · Austin, TX · Member since 2013 · 443 posts · 174 votes
    10y

    @Account Closed That's exactly what I am talking about! Your proximity to work is a concern for your lifestyle not your ability to pay back the loan.

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  • Russell BrazilBusiness Member
    Moderator
    Real Estate Agent · Washington, D.C. · Member since 2012 · 17k+ posts · 30k+ votes
    10y

    I had to write a letter of explanation that I did not own a property that was in another state that had been owned by my father who had died 20 years prior to this.

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  • Joseph Weisenbloom
    OP
    Investor · Austin, TX · Member since 2013 · 443 posts · 174 votes
    10y

    @Account Closed Ahh gotcha. Yea that makes sense. I totally agree they lender should verify with the IRS. At the end of the day its a numbers decision whether the lender should take on the risk to loan out the money. That being said I don't see how it would lower the risk of the lender to have a hand written letter about something.

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  • Joseph Weisenbloom
    OP
    Investor · Austin, TX · Member since 2013 · 443 posts · 174 votes
    10y

    @Russell Brazil Oh wow a letter for a property you don't even own?! Thats crazy

    1Reply
  • Chris MasonPro Member
    Moderator
    Lender · CA · Member since 2015 · 9k+ posts · 10k+ votes
    10y
    Originally posted by @Joseph Weisenbloom:

    @Account Closed That's exactly what I am talking about! Your proximity to work is a concern for your lifestyle not your ability to pay back the loan.

     Actually occupancy fraud was the concern in Bryan's case. The most common type of mortgage fraud: Buy an investment property, say you're going to live in it, don't ever actually move in. It  being 5 minutes closer to work works, so does describing how the home is a better fit for your family because it has more space outside for your dog, etc. Basically something to show that this owner occupied acquisition makes sense even from a non-financial perspective. 

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  • Chris MasonPro Member
    Moderator
    Lender · CA · Member since 2015 · 9k+ posts · 10k+ votes
    10y

    I feel like I should have many many anecdotes to contribute here, but I think I'm just numb to it all by now and used to asking for completely crazy things. Usually I explain why we're asking for something ridiculous by leading with "...a historic form of mortgage fraud was..." and tie it into 2005-2007. Most ridiculous things make sense when you think about it as "back when this was NOT asked for, how did people take advantage and commit fraud?"

    For example @Account Closed's 4506-T thing. A historic form of mortgage fraud for self employed persons was to dummy up fake tax returns saying you make $1m/year for the lender, when in reality the returns you gave the IRS said you made $50k last year. Ergo we now need to validate that the returns you provided us are the same that you provided the IRS to prevent that from happening again. 

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  • Max T.
    Investor · Philadelphia, PA · Member since 2015 · 3k+ posts · 3k+ votes
    10y

    Once I had to provide a lock of hair and one pair of dirty underwear.

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  • Joseph Weisenbloom
    OP
    Investor · Austin, TX · Member since 2013 · 443 posts · 174 votes
    10y

    @Max T. Of course standard procedure ;)

    2Reply
  • Joe Paoletta
    Investor · Brecksville, OH · Member since 2016 · 8 posts · 1 vote
    10y

    i had to provide car titles to all the vehicles i owned and prove that they were insured. 

    1Reply
  • Chris MasonPro Member
    Moderator
    Lender · CA · Member since 2015 · 9k+ posts · 10k+ votes
    10y
    Originally posted by @Joe Paoletta:

    i had to provide car titles to all the vehicles i owned and prove that they were insured. 

     That seems completely crazy to me. Do you know why they required that?

    For context: when someone owns a house free and clear, I've never had to ask for proof of insurance...

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  • Aaron HowellBusiness Member
    Real Estate Agent · Crozet, VA · Member since 2014 · 436 posts · 223 votes
    10y

    I had to write a signed statement stating that I wasn't married to my mother (we own two properties together) and that she was my mom and not my wife.

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    3Reply
  • Christina Yoon
    Accountant · Hunt Valley, MD · Member since 2016 · 49 posts · 17 votes
    10y

    Once the irs gave me a slightly higher refund than what my tax return stated. 

    I had to write a letter stating I didn't know why the irs goofed in my favor :)

    1Reply
  • Jacob Pereira
    Real Estate Agent · Austin, TX · Member since 2014 · 636 posts · 486 votes
    10y

    My full last name is Rodrigues Pereira, and I once had to send a letter to the underwriter stating that I wasn't Jason Rodriguez (my first name is Jacob), who was some random guy who had a judgement against him. I couldn't resist adding in the line "our respective names are spelled and pronounced entirely differently."

    3Reply
  • Ralph R.
    Investor · Bethel, AK · Member since 2013 · 1k+ posts · 852 votes
    10y
    Joseph Weisenbloom I once was told according to the appraisal I must raise the rents in the duplex I was buying. this was after the loan was funded, about 3 hrs before closing. Another time I was asked to explain a credit hit on my credit history. The hit was the lenders credit check they did while approving me for the loan. Nuts huh?? RR
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  • Chris MasonPro Member
    Moderator
    Lender · CA · Member since 2015 · 9k+ posts · 10k+ votes
    10y
    Originally posted by @Ralph R.:

    Another time I was asked to explain a credit hit on my credit history. The hit was the lenders credit check they did while approving me for the loan. Nuts huh?? RR

     I've seen underwriters condition for that, and it's your loan officer's screw-up for asking anything of you... I just re-upload the credit report that the underwriter has already scrutinized a second time, and tag it as being for that condition like a smart-***. :P

    I like to imagine them going "wait, where have I seen this credit report before...? oh, in THIS VERY LOAN I AM RIGHT NOW UNDERWRITING would you look at that!!"

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  • Anna Buffkin
    Investor · Pawleys Island, SC · Member since 2015 · 324 posts · 385 votes
    10y

    My husband is a teacher.  We were moving  1.5 hours away over the summer. The underwriter was concerned he was unemployed over the summer.  teachers get paid year round. it took several letters to resolve. Same underwriter needed a letter stating he did not own a house that was not in his name somewhere.

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  • Marco G.
    Investor · Dallas, TX · Member since 2015 · 446 posts · 197 votes
    10y
    On my primary residence purchase mortgage I was asked to explain why a particular address showed up on my credit report. It was a vaguely familiar address but not one that should have been on my credit report, so I freaked out. After hours of searching documents and pulling credit reports, I couldn't find the address anywhere. So I googled it. It was my real estate agent's office address. So I had to write a letter saying that it was my agent's address and that I was unable to verify it as being on any credit report. Why did I have to write that letter? Because after emailing the same to the lender, they instructed me to write it anyway for the file.
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  • Jake Knight
    Lender · Elk Grove, CA · Member since 2016 · 190 posts · 94 votes
    10y

    As someone who has been on the sales side, and is now on the underwriting side, I've seen conditions like the ones mentioned but also just as ridiculous things from the folks submitting loans. There's not a day that goes by that I don't shake my head at some incredibly asinine thing a customer or banker tries to get away with. I enjoy being on both sides of the table. Now, if you'll excuse me, I'm going to go start a thread about strange things borrowers have done on the underwriter's forum. It's called SmallerPockets. 

    2Reply
  • Joseph Weisenbloom
    OP
    Investor · Austin, TX · Member since 2013 · 443 posts · 174 votes
    10y

    @Jake Knight Hahaha Fair enough. Don't mean to totally bash underwriters they are certainly nessasary to getting the loan done. Everyone does strange things sometimes. That being said everyone here is a real estate investor so I wanted to see if everyone was dealing with this same situation.

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  • Chris MasonPro Member
    Moderator
    Lender · CA · Member since 2015 · 9k+ posts · 10k+ votes
    10y
    Originally posted by @Marco G.:

    On my primary residence purchase mortgage I was asked to explain why a particular address showed up on my credit report. It was a vaguely familiar address but not one that should have been on my credit report, so I freaked out. After hours of searching documents and pulling credit reports, I couldn't find the address anywhere. So I googled it. It was my real estate agent's office address. So I had to write a letter saying that it was my agent's address and that I was unable to verify it as being on any credit report. Why did I have to write that letter? Because after emailing the same to the lender, they instructed me to write it anyway for the file.

     ...all you had to do was write "To whom it may concern, I have no idea why 123 Main St appears on my credit report, I do not and have never lived there. /s/ Marco G."

    Question for the folks in this thread. Back at the LO assembly line I was trained to just write what the underwriter wants to read that is also true to the best of my knowledge, give it to borrowers to "check for accuracy," and then sign what I wrote. So I do the address LOE, the credit inquiry LOE, the YTD P&L and balance statement, all that stuff, and just send it to be signed by the borrower after they "check for accuracy and revise as needed" (95% of borrowers just sign whatever the heck I write, so to the best of my knowledge my imagination is correct 95% of the time as indicated by those signatures). 

    Is that approach unusual?

    1Reply
  • Jake Knight
    Lender · Elk Grove, CA · Member since 2016 · 190 posts · 94 votes
    10y
    Originally posted by @Joseph Weisenbloom:

    @Jake Knight Hahaha Fair enough. Don't mean to totally bash underwriters they are certainly nessasary to getting the loan done. Everyone does strange things sometimes. That being said everyone here is a real estate investor so I wanted to see if everyone was dealing with this same situation.

    No offense taken! I feel for the people who have to deal with terrible underwriting. I see some underwriters just get complacent and lose sight of the big picture (if they ever saw it in the first place).

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  • Jason V.
    Investor · Rochester, NY · Member since 2016 · 477 posts · 426 votes
    10y

    My wife and I have adopted three kids (two separate adoption processes) in the last four years. Because we've always borrowed from where we bank, they brought up the 'unique' transaction history on our accounts. 

    We've had to provide letters and invoices from our adoption agencies clearly stating how much the adoptions cost, and where we were in the fee schedule (the combined cost of the 3 adoptions was almost $100,000.) We also had to explain why we received such large tax refunds every year we adopted (for international adoption of children with special needs, there is a one time ~$13,000 per child credit from the IRS to help offset the cost of the adoption.) 

    And most critically, we've had to explain the sizable amounts of money we've spent overseas and on travel expenses - as our first daughter is from Colombia, and our other two are from a country bordering Turkey and Iran.

    So yes: we've traveled extensively to countries with colorful histories, and have large transactions of cash in and out with some degree of frequency - we're the perfect borrowers :-)

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  • Chris MasonPro Member
    Moderator
    Lender · CA · Member since 2015 · 9k+ posts · 10k+ votes
    10y
    Originally posted by @Jake Knight:
    Originally posted by @Joseph Weisenbloom:

    @Jake Knight Hahaha Fair enough. Don't mean to totally bash underwriters they are certainly nessasary to getting the loan done. Everyone does strange things sometimes. That being said everyone here is a real estate investor so I wanted to see if everyone was dealing with this same situation.

    No offense taken! I feel for the people who have to deal with terrible underwriting. I see some underwriters just get complacent and lose sight of the big picture (if they ever saw it in the first place).

     How about I poach you and you come underwrite for us? :P

    1Reply
  • Chris MasonPro Member
    Moderator
    Lender · CA · Member since 2015 · 9k+ posts · 10k+ votes
    10y

    I'll share a completely stupid one with everyone that I was just reminded of.

    So, private jumbo investor. They get to make up whatever guidelines they want, Fannie/Freddie do not matter. Very competitive interest rate pricing, so I like this investor... most of the time. 

    They have a little income worksheet thing that they made up, nothing super unusual. 

    For overtime income, it asks how much the person got in the last 2 tax years, and how much they've gotten year to date. It also asks what the effective date of the most recent paystub is, which makes sense: if we're 3.533 months into the year and the borrower has rec'd $Y in overtime year to date, you could divide $Y by 3.533 months and arrive at a spot on accurate YTD monthly average. If someone works 10 hours of overtime per week with 100% consistency, you will arrive at a number that is 100% consistent with overtime income from the last two years. It even is sufficiently detailed that it populates the 3.533 number right down to how many days there are in the current month and even knows leap years.

    But the stupid little worksheet does not do that. It does not divide by the number of months into the year that we are.

    After taking the time to very carefully ask our underwriter to fill in how far into the year we are to arrive at a number like 3.533 months or 4.276 months, it takes your YTD overtime income.... and divides by 12!

    So your calculated effective overtime income if you apply for a mortgage with this jumbo investor in November will be approximately twice as high as it would be if you applied in April or May even though in reality you make exactly as much this year as you have for the past two years.

    And the net effect to a borrower of this, is that you might end up with a higher rate (if we assume that this jumbo investor happened to have the most competitive rates the day you went into contract) because some person making up a completely idiotic worksheet doesn't know how to math and some investor has a firm "no exceptions" policy.

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