Cincinnati, OH · Member since 2017 · 22 posts · 8 votes
Hello BP community, i'm in the final hours of a deal and underwriting is all of a sudden requesting that I hand over the closing disclosure from a deal that I closed 5 months ago. Has anyone ever experienced this?
The other deal was an FHA owner occupied duplex. (My home) and the credit union wants to see the closing disclosure from this transaction. Why?
The new property is going to be used a rental, conventional loan, 15% down, and the credit union intends to sell to fannie mae.
D'Andre - it may be that the loan is not pulling up on your credit report yet. it is too new. It could be that they are confirming who exactly is on the loan/title. It could be for a bunch of different reasons. But I believe per Fannie/Freddie, any property purchased in the last twelve months or so much be documented via CD or what used to be the Settlement Statement.
I wouldn't jump to any major conclusions about it and they probably should have asked for it a while ago. That is the problem with a lot of lenders - they miss conditions they should have required ahead of time. Then the timing of their request is really what starts to make people nervous.
You didn't mention if this is the same property but sounds like it is. They are likely reviewing to ensure they meet fannie mae guidelines to sell the loan. I've had this come up and had to list improvements done as well. If this is the case the seasoning requirement is met after 6 months.
I'm trying to close on a SFR with the credit union. 6 months ago I purchased my first home using an FHA loan using a different lender. The credit union now is asking to see the closing disclosure from my first home purchase which escapes me because this has nothing to do with anything regarding the SFR i'm now acquiring.
D'Andre - it may be that the loan is not pulling up on your credit report yet. it is too new. It could be that they are confirming who exactly is on the loan/title. It could be for a bunch of different reasons. But I believe per Fannie/Freddie, any property purchased in the last twelve months or so much be documented via CD or what used to be the Settlement Statement.
I wouldn't jump to any major conclusions about it and they probably should have asked for it a while ago. That is the problem with a lot of lenders - they miss conditions they should have required ahead of time. Then the timing of their request is really what starts to make people nervous.
Thanks Jeff, that really helps me look at the situation differently. I've already decided to just sent it to not further impede my end goal of acquiring the property. I was afraid they would use it to possibly inflate their fee structure...basically "if he paid x amount before why can't we charge him x amount again or higher" maybe this irrational but I don't see how they could possibly benefit or approve my loan based on an old closing disclosure from another transaction.
I think you will be good based on what you have told us. I think they just weren't on top of everything. And honestly, if they do something like that, you need to find a new lender.
update.....my lender us the clear to close yesterday. During this recent discovery phase where they kept asking for more docs, I learned that they were incorrectly calculating my debt to income ratio....they had mine at 44.5% and the max for the loan/lender was 45%.
My DTI number was actually more around the 32% 33% area. The lender said it was a computer glitch/typo that caused this. This error ultimately had major implications because I would have looked at higher valued homes in different areas...this mistake also almost caused me to be denied the financing on the deal I found within the loan limit they set for me based on this incorrect DTI ratio.
Long story short always double check the lenders calculations.
Nonetheless I'm grateful that I'm able to move forward on this rental property. There is a plus, basically this let's me know I still have room to finance another property in the 40-50k range.
update.....my lender us the clear to close yesterday. During this recent discovery phase where they kept asking for more docs, I learned that they were incorrectly calculating my debt to income ratio....they had mine at 44.5% and the max for the loan/lender was 45%.
My DTI number was actually more around the 32% 33% area. The lender said it was a computer glitch/typo that caused this. This error ultimately had major implications because I would have looked at higher valued homes in different areas...this mistake also almost caused me to be denied the financing on the deal I found within the loan limit they set for me based on this incorrect DTI ratio.
Long story short always double check the lenders calculations.
Nonetheless I'm grateful that I'm able to move forward on this rental property. There is a plus, basically this let's me know I still have room to finance another property in the 40-50k range.
Unfortunately the software we all use is crap - I've used all of the most popular mortgage loan origination software suites, and this is ubiquitous. I say this to every Bay Area software engineer I do a loan for, and invite them to make better software so I can make them a millionaire, but none have taken me up on it.
Pragmatically, my personal response is that I re-created unofficial mortgage qualification software in Google Sheets so that I have a built-in second check. If my numbers show 33% DTI but the official software says 47% (happens with shocking frequency), I know that one of the two is obviously wrong, and I know this early in the process. This is redundant, but it gets the job done.
In your case, fortunately, you got CTC and the issue was resolved. So all in all not the worst outcome possible - think of the people on the other side, who had their DTI jump from 44% to 67% after all contingencies were released, one week before closing, and had their loan denied! Even so, it does totally suck that you were looking in the wrong price range due to software nonsense. I'm going to use the term "Silicon Valley" right now just to increase the probability that some software engineer who wants to be a millionaire reads your post & decides they want to fix the mortgage industry.
thanks for the response Chris, I was in total shock when this came to light. I took it personal for a second and thought the bank was trying to keep me from getting a loan.
Maybe we can make this software...pretty sure we can find some freelance coders lol
This sounds super interesting. If you'd like, we can actually try working on this together. I have a team of engineers and business professionals who can probably make something of this.