Save a tree...do you really need all that paperwork?

Save a tree...do you really need all that paperwork?

Seems that of late, I've run into a number of potential borrowers asking this, a lot!

How many times have I been asked "why do you need all pages of the tax returns. Won't the first two pages be enough?  It has everything you need!"   OR   "That's really stupid you need all pages of the bank statements....the balance is listed on the front"

Yes folks, if you are seeking a mortgage loan, your loan consultant WILL need all pages.  Even that pesky one that states "this page left intentionally blank", if applicable.

Why you ask?  It's really pretty simple.  You're asking a bank or mortgage company to probably lend you a pretty hefty chunk of change, right?  Well, if they need to analyze your tax returns as it pertains to your income, they need to see EVERYTHING as it pertains to your income, as to determine if that income is eligible for qualifying purposes.  I touched on the use of tax returns for mortgage qualifying, in a previous blog.  Not only are they looking for what types of income are eligible, they will also be on the lookout for things that aren't allowed.

In terms of bank statements, again, you may ask yourself "Why the need for all pages?"  Well, not only is the lender going to want to verify you have enough in your bank account to cover your down payment and closing costs, they also want to look at your banking "pattern", if you will.  Are there a lot of NSF fees?  That may indicate to an underwriter that there is some financial irresponsibility on the part of the individual seeking the loan.  We are finding that some investors are delving even DEEPER into those bank statements.  For instance, in the past, it was generally acceptable for the underwriter to ask the borrower to document any large, out of the ordinary deposits.  Outside of normal payroll deposits.  Why would they care?  Well, if there are large deposits, it could be an indication of maybe a recent cash loan the borrower secured.  Any new loan they incurred would need to be taken into consideration with regard to their monthly outgo of expenses.  Recently, we've learned that investors may possibly require that ANY deposit, outside of a payroll deposit, be explained.   For instance, I recently had to have some borrowers document and papertrail some very small non payroll deposits that were actually a result of them receiving some small refunds from their previous utility companies

Again, it's just an added notch in the ever tightening mortgage belt.  Borrowers need to remember, it's not their individual loan officer making what they may seem to think are unrealistic requests.  It's required in order for your loan to be saleable.