You Can Qualify for a Mortgage II– Anecdotes
By Keith Rockmael
Dyniece-Abril Ryssemus, a San Francisco based REALTOR® with Intero, and former loan officer, spoke of a situation for two of her clients. Her newlywed couple recently made the decision to buy their first home. The husband completed a short sale on his condo in Silicon Valley in May 2012 for relocation reasons. Both buyers have credit scores of 750 and 800, respectively, and both maintain stable long term jobs along with substantial assets. They sought to purchase a home in the $1.2 million range and planned to put 30% down. In the old banking world this loan would be a slam dunk. However, they were unable to qualify for a loan. Apparently there was something in their loan application that, according to the lender, made them ineligible for a loan because of the new Qualified Mortgage (QM) regulation changes. In her words, their loan officer was “shocked” because his office had done a similar loan just two months prior.
With QM rules going into effect January 2014, loans outside of QM have been harder to qualify. The underwriting requirements have become more stringent. Some banks have also introduced underwriting standards that are stricter than the QM parameters. Because of the increased regulatory scrutiny, many lenders now question if they will lend outside the new QM parameters.
In regard to her clients decline for a loan, Abril-Ryssemus said, “I have a pretty strong network of lenders and I started to put calls in and see where I could find a portfolio product that would meet my clients’ needs. We found a portfolio product and a bank that would offer them a 30 year fixed loan at the two year anniversary of the short sale. It’s a product that is in the bank’s underwriting guidelines. They were not too happy with the QM parameters changing their initial timeline of purchase by a few months, but they are happy we found a loan solution with an acceptable term and rate.”
Abril-Ryssemus offers a few suggestions to REALTORS® working with clients experiencing challenges getting qualified for a mortgage.
• Pre-qualify your client in the beginning of the process before you take them out to see property. It really saves everyone a lot of time and heartbreak.
• Understand the new QM rules and have different lenders in your resource pocket – mortgage brokers, mortgage bankers, large, medium, and small banks, and credit unions.
• Understand what the various lenders can and can't do, and send your clients to the right lender.
Merced based REALTOR® Marija Prgomet with Coldwell Banker spoke about a recent referral client who had a solid job and a good salary but went through a divorce and a short sale. Prgomet, along with a mortgage banker, educated her about what she needed to do. Prgomet stayed positive and told her client, “If I was in your situation I would sign up for credit monitoring service that offers tips on how to improve credit.”
Her client signed up for credit monitoring and cleaned up her credit one item at a time. Prgomet added, “She lowered her debt and paid off outstanding items and it worked. I suggest working a plan and sticking to it. It takes persistence and patience but it is worth it. She worked on cleaning up her credit. After 2 years she was able to qualify for a loan and I sold her really nice house in a desirable neighborhood.”
Before signing up any credit monitoring service, clients should always check with the Better Business Bureau and other sources to make sure the credit monitoring service is one that is ethical and follows the law. There are some services that over promise or engage in practices which are of questionable legality.