When well qualified borrowers can't get loans

By Michael Mapes, The Responsible Mortgage Lender.com  

When borrowers who can document income and credit is in the high 750 range can not get loans then we are all in trouble.  Recently that has happened to a couple wishing to refinance their home. 

Royce and Cathy wished to refinance their home and take cash out for the purposes of doing some home repairs and upgrades.  The couple's credit is stellar, in fact the scores that are on their credit are so stellar the lowest score is 750.  They have no other debt than their house payment and the house payment represents only 30% of their gross income.  However, the new FNMA desk top underwriting model suggested that they were a risk to the lender and did not approve their loan through the automatic model.

In days gone past this loan would have been approved and closed with minimal questions asked.  Today the market is in turmoil and even well qualified borrowers are finding it hard to get approved for a loan.  The new FNMA model puts a lot more weight on cash assets for approving a loan and loan to value exposure.  While it still views debt to income ratios important its latest upgrade also places great weight on the reason for the refinance and the reserves that the borrower is able to prove.

When your borrower is applying for a loan the best approach is full disclosure of income and assets.  The more assets that one can document the better, as we work through this tightening of credit it could mean the difference between a smooth process or a process of heartache.

Michael Mapes can be reached at 757.599.1810 ext 225 or on the web at http://www.theresponsiblemortgagelender.com/ or apply on line at www.suntrustmortgage.com/mmapes