I had a mortgage denied last week. Both were loans that should have been made with little effort previously.
Our borrower was a waitress, that was denied because her debt ratio was considered too high. She was purchasing a home for $180,000, putting 20% down. Even though we had automated approval, with a 49% debt ratio the lender said no. Even though the lender knew that some of her tips were unreported income, they considered the loan too risky.
We had a couple of choices, put more money down, which she had but didn’t want to do, so I moved the loan to another lender that would do the loan, but the rate would be an 1/8 percent higher or an additional $9 per month.
Both lenders sell their conventional loan to Fannie Mae, but not every lender is willing to take certain risks, because of their history or buy back agreements.
We are fortunate that we have numerous options for our clients.
By: Kate Berry