This past week there were at least two blogs written “Another one bits the dust!!!” and “Miami Real Estate Dilemma”, about Closings falling apart at the last minute. These Closings fell apart because things that should have been addressed on the forth page of the 1003 (Loan Application) in the “Declaration Section” were not addressed, or maybe not even asked by the Loan Officer/Broker at the time of application. The forth page is a page of the 1003 that might not be given as much attention by some Loan Officers or Brokers, as is given to the other three pages of the Loan Application. But as we saw this past week in the two Posts I that mentioned above, the questions that are asked on this page are extremely important. If these questions are not asked and explained to the Borrower vital information will be omitted, and last minute nightmares can occur.
The first Post that brought to light just how important this section is, was “Another one bits the dust!!!” by Broker Bryant. This Post was about a Closing that blew up because it was revealed at the last minute that the Buyer had three properties foreclosed in the last ten years. If question “c. Have you had property foreclosed upon or given title or deed in lieu thereof in the last 7 years?” and question “e. Have you had property foreclosed upon or given title or deed in lieu thereof in the last 7 years?” were asked and answered honestly by the Buyer, than this situation should not have happened. So in this case either the Buyer lied or the Loan Officer did not do his job and asked these questions.
The second Post by Ines Garcia “Miami Real Estate Dilemma” was even more obvious that the Loan Officer did not ask the questions on the “Declaration Section” of the forth page of the 1003. This was obvious because if questions “j. Are you a U.S. citizen?” and question “k. Are you a permanent resident alien?” were asked, steps to correct that situation could have started right at the time of applications, and that whole nightmare could have been avoided.
As you can see page four of the 1003 is not a minor or unimportant page. These questions are there because most of the information on this page is not provided anywhere else on the 1003, and can have a great impact on whether or not the Loan will be approved. Besides the questions already discussed, there are other questions in this section that can have a huge impact on the approval of a loan. Questions such as “a” and “b” which deal with judgments and bankruptcies. Questions “g”, “h”, and “i” which deal with area’s that will affect the Buyers “Debt To Income Ratios” are a must to ask. Even question “l” which asks “Do you intend to occupy the property as your primary residence?” is a must ask. What a surprise this one can create if at the last minute it is discovered that the property is not going to be the Buyer’s primary residence, and instead is an investment property, talk about a major nightmare.
These questions are a part of every 1003 for very good reasons, and HAVE to be asked each and every time, because if they are not, you end up with situations like Broker Bryant and Ines had. This is just one more reason why Realtors have to insist on working with Loan Officers and Brokers that are professionals. Most Realtors these days would not think of having a Buyer purchase a house without doing a “Home Inspection” so why not insist on a “Loan Inspection” by a Loan Officer/Broker that you trust. Then you can be confident in knowing that not only these questions were asked, but that all aspects of the Loan Application process were closely examined. In doing this the Buyer is not committing to taking out the Loan with the Loan Officer/Broker of your choice, but it will help to eliminate many disasters and sleepless nights for Realtors and Buyers.
Info about the author:
George Souto is a Loan Officer who can assist you with all your FHA, CHFA, and Conventional mortgage needs in Connecticut. George resides in Middlesex County which includes Middletown, Middlefield, Durham, Cromwell, Portland, Higganum, Haddam, East Haddam, Chester, Deep River, and Essex. George can be contacted at (860) 573-1308 or firstname.lastname@example.org