All Forum Posts by: Daniel Hennek

Actually it can vary based on the lender involved.  Some will allow the full appraisals to be converted to exterior only or desktop while others will still require a full interior/exterior inspection.  Even if your AUS findings state that you must get a full inspection, they can be converted due to COVID.  Not everyone is doing it though.

However, not all can be converted even if you're with a lender that will allow it.

As mentioned above, go to the VA website to see if you're eligible for a VA loan here --> https://www.va.gov/housing-***...

If you are eligible you can apply for a COE(certificate of eligibility) right there.  There are tables to tell you if you're eligible based on your service history.

The average loan officer is not going to be able to tell you if your employment history is a problem, you're going to need someone high level that knows their lender and can read guidelines to have a good idea, and even then they won't be able to give you a "for sure" kind of answer. You can manually underwriter FHA and VA loans which means an actual underwriter can look at a combination of factors to determine if you're a good credit risk. Job gaps can be problems, but not necessarily a disqualifying factor. Moving from one job to another without any gaps is not a disqualifying factor either. Without talking to you and knowing your full situation it's hard to say if the job situation represents a risk factor that an underwriter might not approve. And then after all that it's still up to the particular underwriter and what they are seeing as all relevant factors to determine credit worthiness.

Many lenders will allow application submissions called TBD submissions.  Your situation is one of the main reasons they offer them, when it's hard to tell exactly what an underwriter will say.  You can submit a full application and have it underwritten with credit, income, bank statements, etc, and they'll just leave the property address out.  That way you can get approved by a lender before shopping for an actual property and putting earnest money down.  That might be your best option, but again, without talking to your personally it's hard to say and that's why I suggest a high level MLO can help point you in the right direction.

findamortgagebroker.com is a great place to find a local mortgage broker.

It has to be a DTI thing. The reason they told you everything had to be at $0 was because that is the fix that the MLO worked out in order to get DTI back in line. If the same balances were on those credit cards at application then the MLO probably screwed up your income calculation and the underwriter recalculated accurately, and lower. If you ran up balances during the process then that's all on you because they might have done a soft pull to refresh the balances and that kicked DTI over the limit. There are parts of your application that inform you not to take on new debt during application, and if you do you need to notify them. Part of the reason you need to notify them is to avoid issues like this. Running up credit card balances counts as new debt.

Either way, the only thing it can be is a debt ratio thing.  The mortgage broker you found likely has a better handle on the numbers and will do the math for you upfront vs being an idiot like 98% of MLOs...Good luck!

Generally no. For agency loans (Conventional/FHA/VA/USDA) you CANNOT use borrowed funds, EVER. Be careful with this. Read your documents thoroughly and answer the declaration questions truthfully.

Most banks will ask you specifically "if any part of the down payment is borrowed".  It's a government monitoring question on the 1003, which is the loan app used by the vast majority of lenders even if they're aren't originating an agency loan.  Many times they won't ask you verbally and it's just a question amongst many on the app so don't gloss over it.

There might be some banks that will allow this but they are few and far between. Just be honest about the funds being "borrowed" when having these conversations.  Any bank would want to know if there is a potential lien against the property. 

Do not think that you can do what Stephen implied and avoid the "borrowed funds" underwriting issue by having them sitting in your account for a certain length of time.  Doesn't matter how long they are in your account if they are truly borrowed funds they will always be borrowed funds.  What Stephen is alluding to is the issue of "seasoning" which doesn't make borrowed funds somehow funds that were not borrowed.  Even if the fund are in your account for 6 months they are still borrowed and if you answer that they are not you are misrepresenting a material fact in order to induce a lender to give you a loan, which is mortgage fraud.

Quoting a very small portion of the selling guide does not mean you've shared exhaustive guidance and a fully informed opinion on the subject.  You probably should not be trying to interpret regulations or guidelines for people and telling them "by following that guidance they will know if it qualifies" because that's not everything to consider here and we're talking about high stakes with regards to mortgage fraud.  If you don't know the subject inside and out you should not be giving "answers" here to confuse people who will read this in the future.

Furthermore, you don't really need GSE guidance on this one because its a simple concept and goes way above and beyond just one GSE's selling guide.  A borrower is either lying or not.  

Just tell the truth and you don't have to worry about guidelines whether it's GSE guidelines or some private bank loan of any kind.  This is all about trying to game the system and get a better rate and if you lie to get a better rate you've committed fraud.  The lender(whoever they are) is going to ask you a variety of questions.  You are going to answer those questions.  Simple.  Lie = Fraud, Truth = good.  If the MLO is coaching you to call this a second home when you are in fact intending on renting it out right away then that MLO should be reported to their regulator so they stop advising people to commit crimes...They should also be reported to their manager and the situation referred to the company compliance officer.

Many people think it's just a small lie or something that doesn't matter.  If it didn't matter the lender wouldn't give you a higher rate and people wouldn't be trying to game the system.  Just tell the truth and you have nothing to worry about.  In this case the borrower is wondering why multiple MLOs would be coaching towards a second home and the answer is simple.  Most MLOs really suck at their jobs and understanding all the implications involved in any scenario is not something they generally care about.

Again, I am my companies compliance officer.  I've written and compiled over 200 pages of company policies and procedures covering all regulatory issues associated with a mortgage company.  Compliance Officer means compliance with regulations, and laws.  That would make me a current industry expert on the subject.  

So, just to reiterate.  Lying is risky, truth is not.

Also, NOT disclosing it would be the omission of a material fact.  Which would be a material misrepresentation of your circumstances in an attempt to obtain a mortgage loan.  Know what that is called?

Furthermore, lenders will conduct audits of files at various points.  Specific people are assigned to find the cheaters.  They look for red flags and they are good at it.  It's fun for them to find the cheaters and they have lots of tricks; if it's there they'll find it.  Do you want to play that game?  You want to see if you're better than the industry at playing the game?  Be honest 100% of the time when asking for large sums of money or there could be VERY LARGE consequences.

Losing your property is the least of your concerns when it comes to mortgage fraud.  Look up the penalties for mortgage fraud in your state, but be careful as your google search history might be used against you in a court of law...

Stop listening to people that don't know what the hell they are talking about!  If you declare a property owner occupied that you intend to rent out you are ABSOLUTELY committing mortgage fraud.  Second homes are considered "owner occupied".

Mortgage fraud is basically "any material representation that would induce a lender to give you a loan under certain terms when they otherwise would not".

Telling them it's second home when you actually intend to rent it out as an investment property is a material representation.  It still blows me away how many people think this crap is acceptable.  Trust your gut and how you read things, not others suggesting it's ok to misrepresent your intentions while getting a mortgage loan.

It really is THAT SIMPLE!  If your intentions are to rent it, then by signing the application declaring the subject as a "second home" and signing the second home rider and owner occupancy affidavit you'd be lying "in order to induce a lender to give you a loan on certain terms".  The terms would be different for investment as you have stated, and there is the hitch.

Google "occupancy fraud" as this is the specific type of fraud you're talking about.  The managers of those loan officers you spoke would most likely want to know that they were coaching you to commit occupancy fraud.  Those conversations can be a little tricky but MLOs should be coached on fraud of all sorts because people come at us with that crap all the time.  If your intention is to actually occupy the property for as a second home then you're fine.  It's about your intentions.  While nobody can tell you your intentions, you'll know if you commit mortgage fraud or not and have to decide if you want to flirt with the law and risk a loan officer or manager submitting a Suspicious Activity Report to FinCEN.

For context, I own a mortgage company and am my companies compliance officer so I'm not some rando spouting nonsense like the person above.  Follow this link for more information on mortgage fraud from FinCEN.

https://www.fincen.gov/resourc...

First of all Congratulations for being in the 1% of Americans that actually read their documents!

All second home riders and occupancy affidavits have similar wording for second homes, but a lender can't tell you how to use the property indefinitely.  They won't amend documents, we spend a lot of time making them and they're uniform for transactions for many reasons.  I understand your concern with the wording of the section with "at all times".  However, life happens.  If it was your intention to comply with the affidavit at closing, but then years down the road things change you are not doing anything wrong.

If your home is not in a flood plain that requires flood insurance then don't pay for it. Consider maybe that it is in a flood plain? Have you looked at the FEMA map? If you can see clearly on the FEMA map it's not in a flood plain, but the lender is telling you that it is why don't you just do their job for them and show them on the map they should already be looking at?

Had a flood plain go right through the corner of a property once and had to have an elevation survey to show the house was above that plain because it looked like on the map it could have touched the corner of the house.

Good MLOs won't leave you hanging and wondering WTF is going on.  Neither will good processors or good companies.  I'm going to suggest you have picked one that isn't so good.  Why don't you talk to a local mortgage broker who only does mortgages?  Specialization is important in the mortgage industry since it's generally a mess and a good broker knows how to navigate all that crap for you.  Not to mention they probably have a better rate, lower cost, or both.