Cash out bank loan denial

[Scott Feldman]

Hello,

Here is my situation. I own a two flat no debt section 8 clients, for the last two years. The bank told me the criteria for the loan is the property it's self not my personal finances.

The preliminary answer from the bank is that the dscr ratio is below 1 and the loan may not be approved. I told the loan officer that this dscr seems wrong and please provide me the back up for your calculations. After several phone calls and emails no response from the loan officer.

Any ideas on how deal with situation?

[Steve Babiak]

Originally posted by Darryl Dahlen:

Something seems off. Why would a bank tell you your personal income doesn't matter on a 2-unit? It should.

Also, while I suppose the lender could use the DSCR as part of their underwriting it seems odd that they would since most lenders use DTI ratios when it comes to residential property.

...

If the OP was applying for a commercial loan for some entity that holds title, then the property's income might be all that matters (no personal income or credit has to be involved unless they are also asking for a personal guarantee).

And a DSCR is only used with commercial loans, so I'd guess that he is applying for this loan with the commercial lending group in this bank (or the bank decided to handle the loan using it's commercial group). And expect that DSCR to be 1.2 or above before they will even think about lending.

Just because a property is 1 to 4 units of residential does not require that the loan be made as a residential loan.