In today's lending climate, there are very few easy loans but the one I recently did for Alfredo and his lovely daughter Emiliana was tougher than most.

Alfredo is a very hard-working man and has two jobs.  One at a car wash and one at an auto detail shop.   Emiliana, is a very caring, loving daughter,  She has two jobs as well.  One as a secretary and then one as a housekeeper at a hotel here locally.

Alfredo's wife and Emiliana's mom, Anna, passed a few years ago.   Emiliana became the woman of the house when she was 15 years old.  She is 22 today. 

I first met them a year ago.   Because they both work so much they rarely see each other but together they had a dream to buy their own home.   A home they could paint, and put up pictures and cook, and live a life like Alfredo's wife never did.  

Unfortunately, their credit was disasterous and they required 100% financing.   

We set a game plan to fix their credit and we spoke regularly.  Emiliana would call me all of the time for updates.  She was just so excited.  You could hear the determination in her voice every time she called.   I was as determined to help as she was determined to own.

About a month ago, we ran the credit again.  It was fair but not good but it was enough to get a loan called a Fannie Mae EA III.   Expanded Approval Level III.   Not very good but still a loan.

Alfredo and Emilia go house hunting and then find a nice little home that was a bank repo remodeled beautifully by an investor who is now flipping it.

Now, the lenders out there will tell you this is the lowest grade Fannie Mae approval you can get and still get 100% financing. 

In fact, Fannie has announced that, in October, EA III's will only go to 95%.  EA III's are also very hard to find lenders who will purchase in today's "anti-subprime" world.

So the underwriter on the loan hates it, of course.  The credit sucks.  The income is too light.  The documentation of the income is sketchy as Alfredo doesn't get a regular paycheck from his detailing job.  The debts are too heavy.  They have medical collections.  The property is a flip.  We have limited places to sell the loan.  The mortgage insurance is too high.   The payment shock is too high.

Blah, blah, blah, blah, blah.  The list of negatives was endless. 

To be honest, if you are looking at it from solely a "risk" factor, quite frankly, especially in today's world, the loan does suck. 

There was no way I could win every argument with the underwriter so I decided to let Alfredo and Emilia argue for me. 

I called Emiliana.  "Emiliana, I want you and your dad to write me a letter from your heart that tells me why you want this home so bad.   Think of this like a school project.   Really pour your soul into into.  Don't hold back.   Tell me what buying this home means to you and your dad."

I cannot tell you the exact contents of that letter but I can tell you it brought tears to the eyes of my underwriter. 

It told the story of Alfredo and how he used to share a room with his four brothers and sisters.  It told of his struggles to make ends meet. 

It told of Alfredo's lifelong 50+ year dream to own a home.  Something his own parents never accomplished.  It told of Anna's dream of owning a home to raise their family. 

It told of Emiliana's birth and how proud they were of her and how proud he is of her today and how bad he wants this for her.  

It told of his jobs and how hard he works so that someday he can afford to help Emiliana get a better education than he had  the opportunity to get.

Emiliana wrote of the respect she has for her father and how even if they didn't get this house today, that the dream would stay alive and they would get it some day.

All of a sudden the risk factors didn't seem so risky.   The income, the credit, the flip, the documentation, the payment shock, all disappeared with the words of Alfredo and Emiliana.  My underwriter approved the loan.   And we got it sold. 

A few years back, a borrower, in his 80's, with marginal credit but a lot of spunk, said to me, "Aaron, I remember a day when banks loaned money to people, not to their credit report."  That has stuck with me ever since.

In today's market, where the underwriters are getting hammered by their supervisors to be very cautious, and rightfully so, I think its important that sometimes, if not always, we have to remind them about the real-life people behind the application.

If you have a marginal loan or client you really believe in, I strongly suggest a motivation letter in their own handwriting written from the heart like Alfredo and Emiliana.  It could save the loan.