Lenders Delaying Deals
Since the major dip in the housing market over the past few years we have seen strict policies put on mortgage lenders. The influx of foreclosures and short-sales has forced a change in the lending market and scared many lenders into a by-the-book process. Where previously buyers simply had to state their income, they are now required to provide documentation dating back years. In recent months, a typical application requires your W-2, pay-stubs dating back for minimum of two years, proof of assets, and good credit. Some lenders require even more documentation that may not even seem relevant to the transaction.These federal lending guidelines demanding more documentation are causing rising frustration in buyers. Lenders are denying loans to home buyers for seemingly the most arbitrary reasons. In one incidence, a doctor making over $400,000 a year was denied a loan because they were unable to provide income documents dating back more than one year and a half. They were forced to wait six months to purchase a home in order to qualify for a loan. Another family was denied a loan for $180,000 on the purchase of a $680,000 home, after they were willing to put $500,000 down. It is not just the strict requirements for qualification that are making the mortgage loans process difficult, but the reluctance of lenders to make exceptions for the rules.
The mortgage lenders claim that if their processes and requirements seem more formal and rigid, it is only because they are following the rules of Fannie Mae and Freddie Mac. These government-owned lending giants buy mortgages from lenders and therefore determine what is necessary for approval. Local agents in San Diego County are more frustrated that the rules are not applied uniformly even throughout institutions. In the same company one underwriter may require a lot more documentation and take much longer to process then others. The extra documentation requires more processing time, forcing agents to extend escrow.
If you are looking to purchase a home over the next few months, be prepared for these stipulations. Have your documentation available and expect a slightly longer process for loan qualification. Recently the average time for loan processing is 30days and more documentation means more delays.
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