Home : Blogs : Robert Rauf : Robert's Blog

Pregnancy and the Mortgage Application, Time to Clarify Some Miss-Information in the rain

There have been numerous blogs this week that discuss pregnancy and the inability to get a mortgage. The blogs make it seem as if banks are sending pregnancy test kits with the disclosure documents and after reading more than one blog, and the comments, I felt the need to set things straight. WE DO NOT even ask the question!!!

First off this has nothing to do with pregnancy. There is nothing new here at all. We are talking about good old fashioned mortgage guidelines that have been around for decades. We are in a Full Doc World and we need to document income and employment.

Here is how Employment and Income is verified:

Review pay stubs, W2's etc... If the stubs mention disability or maternity leave it is a red flag
Call the employer: "Does Jane Doe work there?" This call is often made just before closing since guidelines require a "fresh" verification. If the borrower is on a temporary leave it WILL cause a problem.

Why?It is pretty simple, mortgage guidelines require income streams to last at least 3 years to be considered for qualifications. Maternity leaves are not permanent income, they are often only for a few months and may only be a form of short term disability.

Will a loan be denied if some one is on maternity leave? No, But the closing may be postponed until the borrower returns to work. The guideline has always required a pay stub to prove the borrower has returned to work. This is not just for Maternity leave, it could be for any form of temporary disability.

This is not a discrimination item, it is purely an income issue. It is also Mortgage Banking 101... The basics that have been in the guidelines for decades. So be careful of what you read, and the source is important as well. A lot of the uproar was from an article floating out in the media that sensationalized guidelines as if they were some new 2 headed beast, The media often takes the side of an issue that will sell things rather than inform accurately.

We keep hearing it is hard to get a mortgage. This is not really a true statement at all. If you pay your bills on time, have a small down payment and a Job, it is pretty easy to get a loan. It is harder to get a loan now if you have crappy credit, Don't have a job, or Don't declare your income. I laugh to myself everytime I have to say this: "You need a Job to get a mortgage" How dare we ask a client how they plan to pay us back?!

Have a great week!

Rob

Mortgage Banker

NMLS ID# 248937

www.RobertRaufHomeLoans.com or my blog: http://activerain.com/blogs/rrauf

(732)223-1630 x102

Since 1987 I have been helping my clients fulfill their dream of home ownership!

Real Estate Mortgage Network Inc.

disclosure

NJ Mortgages, New Jersey Mortgages, Mortgages in NJ, mortgage in New Jersey, Mortgages in New Jersey, Toms River NJ 08753 Brick NJ 08723

Posted by Robert Rauf on 07/21/2010 03:26 PM

Comments (98)

income verification, mortgage myth, mortgage information, mortgage guidlines

Generate short URL

This post has been included in New Jersey Real Estate News Ocean County, NJ Real Estate News Toms River, NJ Real Estate News
Post is included in group: The Optimist
Post is included in group: The FHA Mortgage Group
Post is included in group: Real Estate Rookie
Post is included in group: Real Estate Professionals
Post is included in group: All About Mortgages/Mortgage Networking

98 Comments on Pregnancy and the Mortgage Application, Time to Clarify Some Miss-Information in the rain

JUL

2010

Rob -

I must have missed the pregnancy ruckus over all the commotion over disappearing pre-approvals and the ridiculous uproar over changing leaderboards. Been WAY TOO BUSY this week for such nonsense. I got appraisals to order, conditions to clear, underwriters to strangle and settlement morons to beat into submission. Gotta go - got a borrower to scold for not getting me something I asked for first thing this morning that he said was coming right over. AAARRRGGGHHH!!!

Robert, this makes perfect sense to me. It is a income situation and should be considered in a mortgage closing. Thanks for the clarification

I'm with Donne on this one. My week sounds like hers so far.

JUL

2010

Robert,

You are absolutely on target. I saw some "expert" on TV yesterday saying you can't get a mortgage when you are pregnant!

Nothing has changed. If you are pregnant and still working you can close. If you are on maternity leave, you must be back to work to close.

This was always the case.

Donne, and Rodney, Glad to hear you are busy!

Kim, it is common sense, isnt it?

Mark, you have to be careful of what the "experts" say! and you are spot on with your comment.

thanks for the info Rob!

JUL

2010

you are welcome Kara!

Great post!

JUL

2010

I've never run across this type of issue. It's interesting. I can see where it would be a disturbing rule for some people though.

JUL

2010

Thanks Josh..

Rich, It has been around for years. It can be an issue if the LO is not informed, or if the LO doesn't understand the guideline. Always best to be upfront with your LO about EVERYTHING in your life!

As with a recent post by a home inspector I know over in Virginia, it's always good when someone else at ActiveRain sets the record straight.

JUL

2010

Thanks Russel. Too many people jump at a blog when they hear about something or read an article with out actually knowing the facts. When I saw the miss info floating around on multiple posts I had to reply with the facts.

JUL

2010

Rob... excellent post. I remember seeing Think Big and Work Small do a video on this and I found it a tad misleading.... very nice job in breaking this down. 2 thumbs up.. and this has been featured in the FHA Mortgage group and All About Mortgages. thanks.

jeff belonger

Jeff, one of the Myths that needed busting in the Rain!

JUL

2010

I don't necessarily think this a myth. Perhaps the New York Times headline was, well, a grabber. However, it was enough for HUD to launch multiple investigations into whether certain mortgage lenders have lending practices that possibly violate fair housing laws -- Fair Housing Act.

http://tinyurl.com/27az4dk - here's a link to FAR's article about the investigation.

Always nice to see a fresh perspective. Though I have seen all the hoops that home buyers with jobs and with good credit have to jump through now.

Nice post!

Hey, I think banks should look favorably on pregnancy . . .there is no way a pregnant woman is going to let the mortgage payment be delinquent . . .even if her husband has to work three jobs or sell his toys! :) Part of that whole "nesting" issue!

Interesting information. Thanks for the post! I had never really thought abou that.

Common sense stuff! Thanks for the post!

In California we can also close using the short term disability income if the ratios are in line for a manual underwrite or we have a DU Approve/Eligible.

i can understand how this would upset a first time mother. the first time around, i was invincible. no complications could affect me, hormones wouldnt upset me, and i was certain i would be back to work in six weeks. it did work out like that, by the way, but the scond time around i would have understood the banks concerns completely. just have to manage our buyers ezpectations.

This is good information. One more useful bit of knowledge to add to my library. Thank you for the post.

So often with the media, it is not so much the facts being wrong as the slant and that nudge-nudge wink-wink hint of impropriety. For the most part, my clients are not having a problem getting loans, even with very modest downpayments, although the pregnancy issue hasn't come up yet, thankfully I guess! This is what I love about ActiveRain: experts from the frontlines that can put things in perspective. Thank you.

I'm so glad you addressed this! This was on the Today Show this last week, then I saw it on another local network and said to myself "Come On!!" The headline was like, "Pregnant? No Mortgage for You!" I couldn't believe that they were trying to make it sound like banks were singling out people who are expecting!! The media will do anything to grab your attention. It's just common sense that the lenders want to ensure the income that's being used to qualify the loan is stable. There was a good little nugget of info though in there that people should look ahead and make sure that they are buying not only what they can afford today, but also in the future. I laughed at first thinking, well that's just common sense. But unfortunately many people don't think ahead - so that's forced lenders to do it for them. Great blog post!!

I have been laughing at the recent up roar about the 'discrimination' against pregnant mortgage applicants mainly because it hits home;O) When we bought our first home in 1999 we were planning to be childless and live a life of travel and luxury so we bought a home that needed two decent incomes. Well, I changed my mind and we decided to have kidsafter a few years:O) The best and most expensive (besides a mortgage) decision of my life. What to do with a big mortgage and now child care and diaper expenses along with many other little expenses that come with babies...oh, my!

Future child care expenses need to be calculated in the home buyers mind. At $1,000/month in many parts of the country it can't be left out of the equation. And if one parent decides to stay home can the mortggage still be paid comfortably?

This make since to me. If I was loaning my money I might want a affidavid signed saying she is returning to work if her income is needed.

Glad you could clarify this information I was really starting to wonder what is going on with this pregnancy issue.

I have said all along that reporting never seems to drill down to the underlying issues - just throw out a superficial statement and see where it goes. The lender has to be very careful with not violating Fair Housing Laws, though, and that subject really draws attention and can shed unfavorable light on lenders that it is even in question.

Robert, You know, it's the "needing a job to get a loan" that just really irks me...such a ridiculous conditon, don't you think?????? (LOL!)

There is so much misinformation. The worst part is that a large segment of the public will believe it. I am glad for all the clarifications on what the rules are today.

Thanks for bringing this up Rob!

Many loan officers miss the rule that says that if the borrower is on short term disability leave for pregnancy (or any other reason) the income ratios will have to be recalculated using the disability income not the regular income from the borrower's job. This can cause a DTI problem.

I'm glad this post got featured, I missed this whole ruckus. Now, if someone asks, I've got a reasonable answer. Thank you for writing it,

It seems to me pregnancy is a fairly predictable process and people can get a general sense of when they plant to return to work. Perhaps there should be rules or a process where people can show a projected return date and reserves or a financial plan to cover themselves until that time.

There are a lot of people that buy before they have the kids so they can use the wife's income to qualify, but know she is living her job.

Thanks Rob,

It makes sense, I just had never thought of it - I do think Valerie #18 has a valid point though - not sure how to quantify that... :-)

Thanks Rob. I have never heard that but it's probably because I don't (didn't) have buyers that are in short term disability situation, so I would never have thought of advising my clients about that. Great post. Always appreciate what I can learn at the Rain!

New is news. It only makes headlines if it's shocking. What a lot of people fail to realize is that there are ALWAYS two sides to the news. The part that's reported and the teh truth. I'm not saying the reporting is lying, neccessarly, just skewed to make the story.

WIth that said, It is true you can not discriminate. Why would you? But lets face it, if you're not emplyed today, how are you going to pay your mortgage today. Underwiting can not predict the future. If they could, we would not be in this mess. They use facts taht are today. Today you income is $X, tomorrow, who knows. Maybe you don't go back to work.

I think the lenders are walking a fine line. Having been on the retail side for the first decade or so of my career it had been drilled to us by our compliance officers that if it appeared a woman could be pregnant we could not even ask what intentions were that it WAS in violation of the ECOA not to mention fair housing. I get the whole income standpoint but HUD is investigating whether or not the lenders are in violation. Personally as a mother to four I feel it is discrimination. A couple at any time into thier mortgage term could decide to reproduce, so why hold it against them at the time of the closing if they can't for a "what if" two years down the road?

Miss-information? How abouts Mrs-information? Just kidding. I had no idea there was a ruckus brewing over this, so thanks for the post and the (obvious) points clarifying. You never know when a client is going to ask about something they saw on TV, so this is a good one.

So what if thecouple puts in a loan app. at the beginning stage of pregnancy? She is working while the loan is processed. Is there any flags on the loan? Thanks for getting back to me.

Thanks for clearing the air on this one. I've had several people call and ask me about various interpretations of the recent pregnancy rumors. Your article was precise and right on target. The whole issue is permananet income stream. So, all you female applicants don't need to run out and purchase a pregnancy test during the loan application process.

I'm not sure how I feel about this. Many couples plan well for that time off, savings. I guess it's not the best timing to try and buy a home right as a baby is due, but with the long delays on these short sales, one could conceive and give birth faster than they can buy the home. Seems unfair that a baby can then cause them to lose it, if they have the reserves to cover that time frame. Not sure....

I don't care what you say it's still discriminatory, if men got pregnant there would be different rules.

Good post-- sometimes people forget it seems that there has to be income and a job and people working to get a mortgage!!

Great post.

Thanks for the valuable info.

I thought they'd get in trouble for this old issue from the 1950s

Thanks, Robert, for your timely post. An accountability partner and I were discussing this on Wednesday--I'm sending her your post.

Rob:

The funny part is this isn't really news to those that are sending people to get a loan to purchase a house. One needs a job and be working typically to qualify for a mortgage. Isn't that where the industry got itself in trouble? Not qualifying people through No-Doc loans in the first place?

Thanks for setting the record straight or at least reminding us what we should already know. Have a blessed weekend!

Lisa aka @allstarmom3

Good post. I'm in favor of banks taking precautions to ensure that a buyer will be able to pay their mortgage. I like my buyers, as people, and would hate to see them get into a home that they can not afford. I've never met a person that was happy that their credit was a mess and that they were o losing their home.

Hi Robert, Very well written and presented post. AR is at it's best when someone like you steps up to the plate !

It never fails to amaze me how Media can sensationalize an existing story by throwing a discrimination spin on it. Lenders ARE not evil entities that scheme constantly to deny loans to helpless pregnant women or people with disability. Media should check both sides of the story and present them both, but that would be 'responsible' journalism, wouldn't it?
Lydia

I can see how people might get upset and feel discriminated against, but it really does sound like sound mortgage banking to me. I've seen many times where someone has all good intentions to go back to work after a baby, but it doesn't happen....either just because they decide they don't want to (rather stay at home) or because of extenuating circumstances (there is no guarantee that a baby will be born healthy). Probably not a great idea to try to get a mortgage in the middle of a pregnancy......then again, as someone said above, some of these short sales can really throw a monkey-wrench into things, they take so long!! Anyway, nice post!

Amen, nice line "I laugh to myself everytime I have to say this: "You need a Job to get a mortgage". We should have been practicing this all along!

Corri Clebaum: I agree with you that you cannot prevent people doing whatever they want before or after they get a mortgage. This includes stating the owner will occupy then renting it, or a week after the mortgage ink dries, quitting the job and starting his own business, etc.

You cannot prove that any of these were fraudulent, because you cannot prove that this is what they "intended" to do after buying the house. Tough to prove intentions (ask my wife).

BTW a curious question?

One of my buyers loan was not even considered because he is a 1099 contractor with Cisco for only 1.5yrs (2yrs is the min). To get the the loan, he applied and got the same exact job he was doing except now he's a W2 salaried employee for one week, and had to wait for the first paycheck. Then he got the loan!

What's the point of a contractor not being able to get a loan, and an employee 1 week into the job able to get the same loan. He can just as easily get fired or quit next week, so why the difference?

Isn't this discriminating based on type of job status?

RE#42-- Karen is right. I had a couple that went for 13 months completing a short sale. Could have easily conceived and given birth during that time, or worse, conceived and could have been denied if leave was schedule around the closing. Tough choices. I guess not many consider abstinence a mortgage issue

Thanks for the clarification. Of course, this could bolster the thought that maybe couples should purchase a home based on one income only. However, what about paternity leaves? Many companies offer those as well, so you could have both parents out on short term leaves. Paternity leaves are usually unpaid unless vacation time is taken, whereas, maternity leaves are considered as medical leaves and disability pay comes in.

Although these rules may have been in place for many years, it is still discriminatory to delay closing due to maternity leave. If the disablity income is there to cover the short time frame and there is a return date on file with the employer, I am not sure why a delay would be necessary.

I think maybe to avoid any potential issues, if the couple mentions they are starting a family or mom is obviously pregnant and due around the time of closing, it might be best to disclose this information so there are no surprises. And we all know that we have to speak very plainly, e.g., if either of you goes out of work due to a short term disability such as maternity leave during escrow, closing may be delayed.

Will the asset managers and short sale negotiators see maternity leave delays as legitimate reasons to delay closing or will they cancel the deal? This is the other issue...

Actually, I can think of circumstances where one should not need a job to qualify for a loan. If you're sitting on a bank account of $1,000,000 and put $100,000 down on a $200,000 house, seems to me you should be able to get a mortgage.

My grandmother bought a house in her 80s without a job. She had income from SS and other retirement funds and also from a building she had sold and was carrying the paper on. No problem with getting a mortgage!

As a mortgage broker, I have run into this situation once or twice.

While I understand the guidelines and the rules, what is understated here is what exactly the banks concerns are. The issue is not really the temporary time off work. If that were it, perhaps increased requirements for assets (i.e., I saved because I knew this was coming) should allow the close immediately. The issue is perhaps a more "gender biased" one. It is simply...WILL she return to work? And that, as far as I'm concerned, is discriminatory. Hey, what's to say your borrower with 20 years on the job won't quit the day after he closes the loan? Nothing. Current employment history really only proves ONE thing - proof that the borrower has the ABILITY to earn. I don't see how pregnancy changes that - unless you want to look at it through the eyes of a "Quaker" - and that is wrong. This is the 21st Century - change is needed here.

I ran into this even in the good times. A buyer for one of my listings was pregnant and working. Right before close she was hopitalized for a pregnancy related condition. the bank refused to fund until she was out of the hospital. It was very tense for a while, but she got better and closed.

Rob, Thank you so much for clearing the air here and setting us straight. FHA Commissioner Stevens even issued a letter on this topic (with outrageous hot air quoted from our politicians): http://portal.hud.gov/portal/page/portal/HUD/press/press_releases_media_advisories/2010/HUDNo.10-158

I guess the symantics here is 'job' vs. 'income', okay you don't necessarily have to have job, but are required to have enough income to qualify for the mortgage. And the same rules would apply to the Father if he is out on Paternity Leave at the time of closing. It is not discriminatory to ask, "Does the Borrower currently have enough income to support the mortgage." The reason (maternity leave) is immaterial in an Underwriter's eyes.

Thanks again,

Jana

Rob,

I agree with Donne's lauging smily face.... I first heard the ruckus on TBWS.... I was doing foreclosure bus tours and it's amazing the people who are upset they have to prove they can afford to pay the mortgage... We really do need to seperate the media hype that sells vs. facts; so don't belive all your feed is a great message on all subject matters!

Thanks for the well written and logical post, bringing reality into focus.

Brenda

All sensationalism aside, there is a discriminatory element to this debate. Under the law, pregnancy leave is to be treated as any other short term disability. (say if you were out for 2 months due to an accident, chemo etc).

It is common sense to not have the same loosey goosey lending practices that led to the mess we are in now. However, it's disheartening to folks like us (realtors, small business owners, constulatants) to be treated as untrustworthy in the eyes of lenders. No one's employment these days is really rock solid.

Thanks for the clarification. Good to know.

Rob, Frenzy before facts - I just don't get it when folks don't do their research when something seems amiss. Thanks for setting the record straight here in "the Rain".

Dear Rob:

Thank you for the post and the clarification.I am glad that there is someone who cares and decided to share the truth with everyone.

We all need to know what is behind the scenes!

Thank you!

Yep, as always, it's in the timing. You gotta be working to get your loan if you need that income to qualify. There was a survey from 2002 (I'll have to track it down) that 23.2% of new moms tell their employer they're coming back to work and don't. That's a huge fall out and a huge risk to the lender

Are you saying "intending" to have a family is "fraudulent"? I doubt it... far different than massaging your 1099 vs W2 scenario. Like I said "I get the income standpoint" I also said "lenders are walking a fine line". The guidelines among programs vary slightly but the lenders make their own guidelines... this being the debate.

Based on the article by the NY Times the lender appears to have stepped over the line and was discriminatory in the assumptions they made where the issue of maternity leave is involved. I have seen many women return to work and the Fathers stay home... She may be giving the baby up for adoption, or a surrogate for that matter. I have myself saved sick days and vacation days and had no change to income. I have had a processor and my boss cover my pipeline for me so that my income was still coming in. I also had my husband nearly up and die on me a few years back and was out of commission 3 months following... My point? Life happens, we all do our best to prepare for the unforeseen, and lenders do their best to avoid pitfalls... No arguing that!

However a word of caution to those in the business to be careful how you approach this so you don't get sued. I know a few lawyers that would love to get their hands on a good test case, since HUD is investigating we just have to wait if this case makes it into courts and see what the judge decides.

The income requirement makes perfect sense, however for a transaction I was involved in the buyers were somewhat aggravated when asked to provide a birth certificate for thier newborn, along with the income documentation. Too personal, much too personal.

Robert,

I agree. The media usually will cover the sensational instead of the rational. The old line is, "If it bleeds, it leads!"

I couldn't agree more with your comment about requiring people to have jobs in order to obtain a mortage. It seems so obvious, but I am constantly surprised by the number of people who believe they are "entitled" to home ownership. You gotta earn it, people.

Rob, I'm a Realtor, not a mortgage person, but I would think that any person with an income and low DTI would not be an issue. How dare pregnancy become an issue!

Congrats on the Feature, Well Deserved!

AUG

2010

Robert, how about the guy 3 days into workers comp & no clue if injury is permanent or temporary (still being evaluated by Dr.) or got all the income paperwork for LO in PM (figured to help by getting basics) then called his job to verify employment (stated being promoted soon) only he was fired that morning for conduct (privacy act so don't know why). In both cases the buyers believed they could still get a loan and wanted hear in person from LO not over phone which wasted both our time but LO showed more patience than me at the time, LOL

I also missed the ruckus, and definitely appreciate the clear and careful way you explained it. I'm sure it will come up in my discussions with first time buyers.

I must've been running for my umbrella when the other pregnancy mortgage posts hit the rain but thank you for the clarification. As a matter of fact, when we were looking to buy our first house I was pregnant and out of work with hyperemesies and collecting state disability. By the time we found a house and qualified for the mortgage I was back to work so it wasn't a problem. Buying our second house, I was out on disability for COPD after having my second child. That time there was no way around it. My husband made enough money to qualify on his own so it wasn't a problem either.

I literally laughed out loud at your line "You need a Job to get a mortgage". Nothing ceases to amaze me!

An old mentor and manager told us of "back in the day" (pre RESPA, pre CRA) how if the wife wanted to include her income in the file, the loan officer was required to ask and document what kind of birth control she used, or if she had hit menopause.

Thanks for the infomation. Great post!

Sonya R. Nevins (Star Realty, LLC) Waterbury, CT

Thanks for bringing this - I have never thought about this and it could be a large factor in someone getting a house...

Your post is timely. I have a short sale client (buyer side) and we are set to close in another 10 days. She is pregnant so all parties involved were racing to get this short sale approved and closed. We did mention to her that if she went on maternity leave that the loan would not be able to go through. She was schedule to go on maternity leave the second week of August, escrow is supposed to close on August 6th so we were rushing to the finish line. I just received an email from my client saying "Just thought I'd let you know that my last day at work was Friday." I just about had a heart attack. 8 months of working towards approval and a close and 1 week shy of closing the deal?!?! I could only advise her to talk with her employer to see if they would confirm employment or not. Verifying employment has always been part of the lending process whether you are pregnant or not.

I agree with Linda, #51 above, I have a pregnant single mother buyer on hold until she delivers. It's even difficult to get her to showings, basically, I'm scared to transport her at 8 mos pregnant. We are looking at listings and creating a list. I hope things go well for her and she resumes her plans to buy. In the meantime, I practice patience.

Rob, as Shakespeare said "Much 'ado about nothing". Income has to be likely to continue, and in the past we could get by with a letter from the employer, saying job would be available and a letter from the borrower saying they intended to return to work.

There's been a lot of talk about guidelines relaxing after we get through this.

Fannie Mae's CEO Lauds 'New Realism' of Better Underwriting
Fannie Mae is building the "strongest book of business we've seen in the last
decade," according to the GSE's president and CEO, Michael Williams. 

This is our market and we'll all succeed by having business partnerships between Realtors and Lenders based on knowledge and
experience, not just rates!

John N., regarding thost questions about birth control and menopause, I was actually asked about my birth control method when we applied for our first mortgage way back when dinosaurs roamed the earth. I was a little embarrassed, but assumed this was "normal." I'm glad those days are behind us!

I am waiting for someone to argue when life begins on a mortgage that is based on "family size" income limits. If a couple is expecting their first child, are they a family of two or three?

Very interesting topic. I am sure a lot of people are not aware about pregnancy that can affect the loan approval or close of escrow date.

I missed the uproar and the other post - but this makes perfect sense. I would not term pregnancy or maternity leave as a 'disability' but I guess the banking industry has deemed it such. I do understand the financial aspect of it, all to do with income and ratios.

Heck, people don't even understand that if they buy a truck or a bunch of new furniture before settlement that it can jeopardize their purchase. I guess the next step is to have a CAVEAT sheet printed in red and orange when prospects take application - BEWARE THESE CONDITIONS CAN JEOPARDIZE YOUR CLOSING! and list them for the uneducated or ill-advised.

AUG

2010

Full doc, in my opinion, does still discriminate against the self-employed or independent contractors. They only count your "net" and then if you write off your car, they go and count that again in debt ratios. So I disagree with your statement if you have a job and pay your bills you can easily get a loan.

Wow, thanks for all the comments everyone.

Keep in mind that we DO NOT ask if some one is pregnant. We call up and say "Does Mr or Mrs Client work there?" and it is when we call the employer that the issue may arise. A pay stub may be the red flag as well. IT has ABSOLUTLEY NOTHING TO DO WITH PREGNANCY. That was the point of this blog, to clear the air that we need to verify the employment and income, NOTHING ELSE!!!!

And yes I did say you need a job to get a loan, This could be substituted with a verifiable source of income - Pension Social Security, investment, interest etc... And any of them would need to last at least 3 years to be considered.

I actually had a NASTY Voicemail waiting for me in my office this morning saying I was disgusting for asking if someone was pregnant and that they were going to do everything in their power to fight this legally and professionally. So JT in MD, who ever you are: Please read the blog and realise my point was that it is not a pregnancy issue, That was the entire point of writing the blog to clear the air!

Thanks!

I was wondering where the confusion was too. It is very logical (you need a steady income!). Thanks for blog and great job!!

Thanks Heather! It is all about income!

Television news seems to do one of two things repeatedly:

1) give a maximum of 30-45 seconds to something that really deserves a minimum of 10 minutes, or

2) they make it a longer story, but only get experts on one side of the issue.

If they ever got back to actually covering the news in a competent manner, we wouldn't have to keep fighting these brush fires.

Better get that 7-month-pregnant in a home, quick!!

AUG

2010

Someone out there always makes our jobs harder because they don't take the time to get all the facts or get clarification to something that isn't clear. Or, better yet, just using common sense...when one is on maternity leave there is a drop in income. When mom goes back to work and hires day care there is an additional monthly expense that has to go into the ratio equation. Great info in the post and comments!

Kristina, for most loans, lenders do Not count child care costs into the ratios... So that really is not an issue. Borrowers should look at that themselves to be sure they budget correctly though!

AUG

2010

Man, I thought I had heard of it all.. great info !! by the way, I was in lending in the early90's and they did count child care in the ratios !!! ( then )

AUG

2010

Marlene, I have been lending since the 80's and the only time I counted child care was on Government loans.. but it wasnt that strict.

AUG

I am running into this issue because my partner broke his ankle 2 months before we are to close on our house being built. We don't know eactly when he will be able to return to work and niether does his md, we have a general idea but everybody heals differently and it has come down to a game of days. The underwriter wants two weeks worth of paystubs before we can close. Seems unfair. Any ideas/comments?

AUG

Kristin, it is all about income and being able to verify how long it will continue. Any source of income needs to last for at least 3 years. and Temporary disability is just that "temporary"

So Typically one pay stub should be enough to prove you are back to work, of course every lender will have different guidelines... If you qualified on just your income it would not be an issue, but if you need both incomes you need a more permanent source of income for your partner for it to be considered in the qualifying equation.

I hope that helps to answer your question?

Thanks Rob, appreciate the answer. I guess my question is more of why can't he be back to work even less than a week to qualify? They will call our employers anyway. It may require more due diligence on the lender but we have many moving parts hanging in the balance depending on our closing date let alone the stress of the unknown here.

AUG

Any time I have had a scenario similar to yours, we just need 1 pay stub, and a verbal VOE prior to closing, just enough to prove you are back to work. It is possible there is a lender or two out there that would add a bit more to that, it is not uncommon these days to see additional overlays... If the people you are working with are being difficult, you can always call another Mortgage Loan guy/gal that services your state ... Just to see if there is something unique about your scenario, or if you may be better off jumping ship.

Leave a response…

Name:

Email:
(optional)

Comment:

What does the graphic say?

Robert Rauf

Toms River, NJ

More about me…

REMN - Real Estate Mortgage Network (NJ)

Address: 16 Madison Ave, Building 2 Suite 2D, Toms River, NJ , 08753

Office Phone: (732) 557-6920 x 102

Cell Phone: (732) 740-0175

Email Me

The mortgage market is ever changing, do not be afraid to ask what is new!

Listings

Links

Robert L Rauf

Archives

Find NJ real estate agents and Toms River real estate on ActiveRain.

Disclaimer: ActiveRain Corp. does not necessarily endorse the real estate agents, loan officers and brokers listed on this site. These real estate profiles, blogs and blog entries are provided here as a courtesy to our visitors to help them make an informed decision when buying or selling a house. ActiveRain Corp. takes no responsibility for the content in these profiles, that are written by the members of this community.

Pregnancy and the Mortgage Application, Time to Clarify Some Miss-Information in the rain

First off this has nothing to do with pregnancy. There is nothing new here at all. We are talking about good old fashioned mortgage guidelines that have been around for decades. We are in a Full Doc World and we need to document income and employment.

Here is how Employment and Income is verified:

Review pay stubs, W2's etc... If the stubs mention disability or maternity leave it is a red flag

Call the employer: "Does Jane Doe work there?" This call is often made just before closing since guidelines require a "fresh" verification. If the borrower is on a temporary leave it WILL cause a problem.

Why?It is pretty simple, mortgage guidelines require income streams to last at least 3 years to be considered for qualifications. Maternity leaves are not permanent income, they are often only for a few months and may only be a form of short term disability.

Have a great week!

Rob

Robert Rauf

Mortgage Banker

NMLS ID# 248937

www.RobertRaufHomeLoans.com or my blog: http://activerain.com/blogs/rrauf

(732)223-1630 x102

RRauf @REMN.com

Since 1987 I have been helping my clients fulfill their dream of home ownership!

Real Estate Mortgage Network Inc.

Leave a response…

Pregnancy and the Mortgage Application, Time to Clarify Some Miss-Information in the rain

First off this has nothing to do with pregnancy. There is nothing new here at all. We are talking about good old fashioned mortgage guidelines that have been around for decades. We are in a Full Doc World and we need to document income and employment.

Here is how Employment and Income is verified:

Review pay stubs, W2's etc... If the stubs mention disability or maternity leave it is a red flag

Call the employer: "Does Jane Doe work there?" This call is often made just before closing since guidelines require a "fresh" verification. If the borrower is on a temporary leave it WILL cause a problem.

Why?It is pretty simple, mortgage guidelines require income streams to last at least 3 years to be considered for qualifications. Maternity leaves are not permanent income, they are often only for a few months and may only be a form of short term disability.

Have a great week!

Rob

Robert Rauf

Mortgage Banker

NMLS ID# 248937

www.RobertRaufHomeLoans.com or my blog: http://activerain.com/blogs/rrauf

(732)223-1630 x102

RRauf@REMN.com

Since 1987 I have been helping my clients fulfill their dream of home ownership!

Real Estate Mortgage Network Inc.

Leave a response…

RRauf @REMN.com