Hi, this is Tom Heath with the Mortgage Guidance Group at Nova Home Loans, and this is our weekly installment of mortgage and real estate related matters. And this week’s topic, it’s a little bit of a touchy subject, but it’s really important that we discuss it. It’s what happens to the loan after the lender sends the wire.
A lot of times a home buyer, and sometimes to real estate agent, thinks that once that wire is sent, everything is good and we are done with that loan and all things have been checked. Well, we’ve checked everything we can to that point, but the loan itself may go through a significant amount of audits and compliance checks over the next few weeks, months, and sometimes even years. Because as this file changes hands from one investor to another in the secondary market, they may do their own audit, and they may come across something that was missed earlier in the process.
We’re starting to see things pop up more frequently. Thankfully not on some of the files that I’ve done, but in examples that I’ve heard of very recently where people purchasing a vehicle prior to closing but after the final credit check had been done. People that have changed their jobs the day of closing but before the loan was recorded and things where the consumer purchased additional property during the process but didn’t think it was important to tell the lender because they didn’t have a mortgage on it.
But they did have taxes, insurance and homeowners associations. Those fees made the loan too high on the debt to income ratio and it changed the findings because the lender didn’t know about it, they funded the loan. This was caught in a compliance check after the fact, and that borrower now is scrambling to find a solution, because if they cannot, then the lender can call their note on their home due and payable, and they only have a couple of months to either refinance it or sell it. If they can’t qualify for the refinance with the higher interest rates, they could put themselves in a bind.
It’s not something we like to talk about. It’s something that’s not really positive and cheery about home buying. It’s really important that your clients, that all home buyers, understand the importance of being extremely transparent with their lender and understanding that the decisions they make, even if they’re not picked up immediately, could certainly be picked up in the long term and cause even more problems.
If you have any questions on this, just give me a call, shoot me an email. I’m glad to talk to you in detail about specific situations. If you’re interested, you can always get more information on our website, MGGroupTucson.com. And if there’s ever a topic you want us to share, just reach out and let us know. Thank you.