New Mortgage Question

[1100011CS]

In the process of getting a construction loan for a major renovation project. Have not seen that question.

 

[ArgentCy]

This is a relatively new question that some lenders may be asking because of the large number of companies that have decided to allow staff to work remotely.

While the question itself may seem invasive, it's really nothing more than this particular lender trying to satisfy the GSE's (Fannie Mae/Freddie Mac) requirement to illustrate that you will continue to work and receive the income you provided on the initial application, going forward.

The GSE's require that a verification of employment (VOE) is conducted within 10 days of closing. With certain industries being shut down and some not, it's become a hot topic that has caused some investors to add additional requirements to "prove" or show that it's likely to continue. These are called additional overlays. Some have them some do not.

Here's the rub...if it were me, I'd ask the question "How can I prove that and what are you requiring me/my employer to provide?". Most of the time, the VOE itself will suffice and I've not heard of someone asking for something like this...but it doesn't surprise me.

In the end, they may simply be asking for you to say "yes, my employer has said that I can work remotely" and they are putting it in the file as an additional layer of risk mitigation. Although, at the end of the day, they know deep down that it doesn't really matter because the ONLY thing they are required to prove is that your employment is what you said it was on the initial application.

Edit: here's the thing to remember. It's their money...how they interpret certain secondary market requirements isn't debatable...it's their decision.

Edit 2: sorry, I see they want a letter. Not surprising.

It's not really their money, though. Most of it is just created from thin air because they called themselves a bank.

The secondary market loans are getting harder to sell and that will mean banks don't want to make loans. I mean who would loan money when the buyer could just turn around and not make any payments for up to a year?

 

[BCoffClone125]

We just moved to Salt Lake City recently and part of the underwriting process for the mortgage on the home we are buying required me to explain how the shelter in place order in Utah has affected my work/employment at my new job. I gave a vague explanation that I am working some remote and some at the office but it was a required document for the mortgage. I don't think they are going to contact my new employer but it was more of a "checking the box" item since I have been providing them copies of my paystubs.

We locked in our rate a few days ago at 3% for a 30 yr mortgage, FYI.

 

[KnappShack]

Determining stability and continuance of income is a standard underwriting component.

 

[KnappShack]

We just moved to Salt Lake City recently and part of the underwriting process for the mortgage on the home we are buying required me to explain how the shelter in place order in Utah has affected my work/employment at my new job. I gave a vague explanation that I am working some remote and some at the office but it was a required document for the mortgage. I don't think they are going to contact my new employer but it was more of a "checking the box" item since I have been providing them copies of my paystubs.

We locked in our rate a few days ago at 3% for a 30 yr mortgage, FYI.

Any points or was that par pricing?

 

[mywayorcyway]

A person isn't legally required to give up their SSN and bank records to get a mortgage, they just won't get a mortgage if they don't. The only way I could see a bank getting in trouble is if they start wading into HIPAA territory.

I agree. While it seems invasive, asking someone if they're going to have a job in three months isn't much different from asking them if they're currently employed.

Even though they've loosened up, it's still much more difficult to get a mortgage now than it was 15 years ago. A friend of mine has quite a pile of money - not FU money, but close. He's nearing 8 figures. He has tried to buy two separate houses the last year; both fell through because he doesn't show regular income and couldn't get a mortgage. He offered to pay up to 40% of the down payment on one of them - still couldn't get one. Both houses were under $1M. He did finally get one approved and shoved through a month ago on attempt #3.

 

[mynameisjonas]

Any points or was that par pricing?

Definitely points.

 

[Beernuts]

Just curious...with the high unemployment rate, struggling economy and high probability of the lowering of home values...would it make more sense to purchase a used home at this time than to build new?

I would think in a few months (when the stimulus checks end and mortgages keep coming due) you may be able to purchase a nicer existing home for the same dollar as building new?

What are people's thoughts?

 

[enisthemenace]

I agree. While it seems invasive, asking someone if they're going to have a job in three months isn't much different from asking them if they're currently employed.

Even though they've loosened up, it's still much more difficult to get a mortgage now than it was 15 years ago. A friend of mine has quite a pile of money - not FU money, but close. He's nearing 8 figures. He has tried to buy two separate houses the last year; both fell through because he doesn't show regular income and couldn't get a mortgage. He offered to pay up to 40% of the down payment on one of them - still couldn't get one. Both houses were under $1M. He did finally get one approved and shoved through a month ago on attempt #3.

“Nearing 8 figures”? Damn. If I had a friend with that kind of money, I’d be pretty close to my dream of “Professional Golf Buddy” business cards.

 

[spinback32]

We actually just signed our refinanced mortgage docs today - 2.5% @ 15 years through Green State (60 day lock from back in March).

We did get that question a few days ago (both the wife and I are in "essential" businesses) and marked that everything was normal.

 

[Beernuts]

I agree. While it seems invasive, asking someone if they're going to have a job in three months isn't much different from asking them if they're currently employed.

Even though they've loosened up, it's still much more difficult to get a mortgage now than it was 15 years ago. A friend of mine has quite a pile of money - not FU money, but close. He's nearing 8 figures. He has tried to buy two separate houses the last year; both fell through because he doesn't show regular income and couldn't get a mortgage. He offered to pay up to 40% of the down payment on one of them - still couldn't get one. Both houses were under $1M. He did finally get one approved and shoved through a month ago on attempt #3.

I think that is an advantage of working with a local lender vs. a large regional bank. The local lender understands their customers situation vs the regional banks looking only at certain numbers in their lending matrix.

 

[mywayorcyway]

“Nearing 8 figures”? Damn. If I had a friend with that kind of money, I’d be pretty close to my dream of “Professional Golf Buddy” business cards.

He had done well for himself and worked until he was 56 when his father passed. Mom was already deceased. He was an only child and his Dad had done VERY well for himself.

He is a golfer and that has come in handy. His Dad was a golfer as well, a damn good one. He played on the 1949 NCAA championship team and they won the title in good ol' Ames, Iowa, played at Veenker. Played with some eventual PGA players, a couple notable. My friend has a flag from it, pretty neat little piece of history.

 

[KnappShack]

Definitely points.

Yeah. There's a bit of a difference between a 3% rate and paying for a 3% rate.

I'm not against buying the rate down if the numbers make sense.

 

[Gossamer]

It's not really their money, though. Most of it is just created from thin air because they called themselves a bank.

The secondary market loans are getting harder to sell and that will mean banks don't want to make loans. I mean who would loan money when the buyer could just turn around and not make any payments for up to a year?

you sound like an expert...good luck.

 

[Gossamer]

I think that is an advantage of working with a local lender vs. a large regional bank. The local lender understands their customers situation vs the regional banks looking only at certain numbers in their lending matrix.

local lenders do understand their customers situation but to believe that one looks at certain numbers differently is not accurate. Also, what is the "matrix" you speak of, Mr. Anderson.

 

[SpokaneCY]

In the process of building a new home and securing a new mortgage.

Anybody else who is refinancing or applying for a new mortgage getting hit with a question about ability to work remotely or at home.

Your employer needs to confirm you are allowed to maintain employment even if you cannot go to an office.

Doubt if that questions was out there 6 months ago.

We just closed on a new home 3 weeks ago in Colorado and we didn't notice any questions like that.

 

[SpokaneCY]

It's fine just no gay wedding cakes.

That never made sense to me.

Make me a cake for my gay wedding.

No.

But you have to.

Ok - here's your cake.

This cake tastes funny.

 

[SpokaneCY]

We just moved to Salt Lake City recently and part of the underwriting process for the mortgage on the home we are buying required me to explain how the shelter in place order in Utah has affected my work/employment at my new job. I gave a vague explanation that I am working some remote and some at the office but it was a required document for the mortgage. I don't think they are going to contact my new employer but it was more of a "checking the box" item since I have been providing them copies of my paystubs.

We locked in our rate a few days ago at 3% for a 30 yr mortgage, FYI.

We closed at 3.25% - no points - about 3 weeks ago.

 

[KnappShack]

Just curious...with the high unemployment rate, struggling economy and high probability of the lowering of home values...would it make more sense to purchase a used home at this time than to build new?

I would think in a few months (when the stimulus checks end and mortgages keep coming due) you may be able to purchase a nicer existing home for the same dollar as building new?

What are people's thoughts?

Was reading an article where the hypothesis said home values will not tank. The number of buyers will fall but the inventory of homes for sale will fall even more....

So basically. I don't know.

I assume it'll be a market to market situation with the virus playing a gigantic role in which way we go.... In a lot of ways.

Migration from cities to places like Boone or Winterset with 100% remote workers? Back to cities with a quick COVID vaccine or the virus fizzles out?

No idea. Throw the stock market in that category too

 

[VeloClone]

In before, "If you can't afford to pay cash for your new home, you can't afford a new home."