Government

Government Shutdown Ends

The Government Shutdown is over.

The IRS is processing 4506-T transcripts on a first come, first serve basis.

The USDA website is back online. They are working on conditional commitments so we should see those USDA loans start to move through the pipeline.

It could be a week or more before the backlog clears out.

10-22 UPDATE USDA does not have appropriated funds. This means they are issuing comments subject to the availability of funds.

Some investors are moving forward with closing fully anticipating funds availability. Others refuse to close without it.

So the USDA is processing commitments but will not issue loan guarantees until funds are available.

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Mortgage Philosophy, Your Mortgage File

Should I Omit Information? Is that Fraud?

Is it Fraud

Is it Fraud

A discussion on ethics grew heated between several staff members a short while ago.

 

Ethics are subject to the scenario in which they apply.  Omitting pertinent information from a loan file is considered fraud, but what if you are omitting information to help make the process smoother for the borrower.

Example: A borrower has a few overdraft charges on his bank statement. It’s clear from other accounts that he has the ability to save money and this appears like a simple mistake.

Overdraft charges, however, are considered a red flag to an underwriter. Questions crop up:

Does this potential borrower have the capacity to budget for a mortgage payment?

Do they mismanage money?

Will this affect their ability to make timely payments?

His loan is otherwise flawless.

Do you omit the bank statement and ask his bank to prepare a verification of deposit (which only shows the current and average balance)?

In this case, you would be omitting any evidence of an overdraft.  You won’t have to bother the borrower and the underwriters won’t ask questions.

Do you address the overdrafts upfront but asking the borrower to explain them?

As intrusive as this is, you are also lending them a lot of money.  Shouldn’t they be asked about the overdraft and required to explain it?

In life, don’t we all judge these situations on the margin?  What are the risks?   Is it to great? Will it be construed as fraud? Is it harmful?

photo credit: JD Hancock via photopin cc

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Mortgage Philosophy, Your Mortgage File

Bank or Borrower . . . . or?

Our economy continues to stumble through a storm of uncertainty and hesitation, unable to take a confident step in any direction. We can trace the tailings back to the mortgage crisis which began a crescendo in 2008, climaxed in 2010, and now, what we hope is the diminuendo going into 2014.  I’ve been in the industry for over ten years and I’ve watched and read as the media attempted to find a scapegoat. Since personal accountability flew out the window years ago, let’s blame the cold, heartless banks, right?  After all, they were just in it for the buck and obviously willing to screw the poor, unfortunate American out of a home.

Really? You think a bank wants a foreclosure? Do you know how much that costs them?! Check it out here.

So while the borrower is busy blaming the bank, and the bank is busy dealing with the hemorrhaging associated with the foreclosure trauma, the real culprit is busy baking up that red herring they love so much.

In this NY Times article we get a glimpse into the events that started it all. In 1999, the Clinton administration pressured Fannie Mae and Freddie Mac to loosen the belt on lending in an effort to accommodate minorities and low income consumers. This idea –regardless of best intentions– had unintended consequence and the reality was far opposite the plan

The payment for this government debacle will cost our country billions, if not trillions in the long term. Since no one feels responsible we have been shrugging off the financial burden of this catastrophe in every way imaginable: TARP, Government MBS Program, no budget, etc. The bill is due, and if we fail as a country to handle it as adults, it will be handled for us.  The latter, as I’ve discovered in my life, is not as pleasant as when you willfully resolve the problem yourself.

Good luck, America.

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