The following was passed along to me by my favorite loan agent, Debbie Owsley, who found it written by Ann McGinley:

The Borrower's 10 Commandments

1.  Thou shalt follow ALL commandments while in escrow.
2.  Thou shalt NOT buy or lease a car.
3.  Thou shalt NOT incur ANY late payments.
4.  Thou shalt NOT quit or change jobs.
5.  Thou shalt NOT make any large purchases such as furniture or major appliances.
6.  Thou shalt NOT file bankruptcy while in escrow.
7.  Thou shalt NOT get married or divorced without notifying your loan agent.
8.  Thou shalt NOT transfer, deposit, or withdrawl large sums of money without notifying your loan agent.
9.  Thou shalt NOT fo on vacation without confirming dates with your loan agent.
10. Though SHALT dwell in the house of the mortgage in peace & prosperity.

Follow commandments 1-9 until your escrow has closed. 

This is invaluable help for the well-intentioned clients who have already been prequalified for a mortgage and may think they are "in the clear".  It is important for our clients to remember how many things can go sour during underwriting that may affect their current or future ability to obtain financing.  Given the nature of the current market, the playing field seems to change daily! 

I encourage any of you reading this to share your last-minute underwriting horror stories - what would you like other clients & their agents to avoid that you have experienced?  I remember the last 100% stated-income loan I closed in 2007....we were told the loan funded (got the call from escrow) and actually got a call 2 hours later saying the funding had been rescinded by the lender due to a last minute condition (it had to do with a job change)....let's share our experiences so we can learn from them, be better agents & better serve our clients! 

As a Realtor in a relatively small, rural market in Northern California, I am astonished at how some of the "trusted professionals" within our industry have refused to acknolwedge and adapt to this changing market & flailing economy.  Prior to becoming licensed as a Realtor, I worked for several years in real estate education, finance, marketing and valuation.  I use that experience to enhance the service I provide my clients.  I have a tendency to be very critical of value and, given the current market conditions, I feel it to be a reasonable approach.  In one of my service areas, there is one appraiser who has, for many years, done most of the appraisals. 

Recently, a property closed escrow in my office and this appraiser was hired by the bank to appraise the property.  The property (40 acres, beautiful custom stickbuilt home, many amenities) had been on the market for 5 months, originally starting at $850K and was in contract for $590K.  This property approached the market at a time that was far less than ideal - values had been plummeting, "doom & gloom" in the news was excessive, lenders were dropping like flies and buyers of all shapes & sizes were finding it increasingly difficult to obtain financing...not a pretty picture.  This particular seller lost her husband shortly after listing the property (his health had been failing).  After almost 6 months on the market, one unconsumnated escrow and reducing the price down to $695K, the appraiser was upset that the property was going to close for $590K.  A call was made to the listing agent and "Distressed Sale Due to Death in Family" was added into the MLS sale comments.  Seller did not HAVE to sell, she observed the conditions not knowing if things would get any better in the near future and anticipating they might get worse.  She was working with one of the best agents in the area, there was nothing to fault in terms of marketing/exposure.  Consequently, this appraiser happened to have her personal residence listed at $725K...20 acres, a manufactured home and EXQUISITE horse facilities too specialized to recoup the investment/replacement cost in this market.

My argument to the appraiser is that this particular sale is not distressed in itself, the entire real estate market & economy are distressed!  ALMOST EVERY SALE CLOSING IN THIS MARKET IS DISTRESSED IN SOME WAY...if you don't HAVE to sell, now is not the time.  I can't count the listing presentations I've had over the past year where myself or my partner explained this to a potential seller.  Truth be told, most of my current listings have some component of distress and the phone calls keep coming in. 

I'd love to hear other thoughts on this....