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Home loans Palos Verdes - Rejection Rates
Getting Home Loans Palos Verdes and elsewhere in the South Bay are obviously not guaranteed. What are the chances of your application getting rejected? Home-buyer rejection rates for major banks range from 11% to 34% according to data released by the Federal Financial Institutions Examination Council. Even though all banks sell most of their mortgages to Fannie-Freddie-FHA, every bank requires applicants to clear additional hurdles (“overlays”) that far surpass federal guidelines. Overlays are self-imposed guidelines which banks follow when approving a mortgage applicant. Overlays vary by institution but usually focus on: 1) Credit scores. 2) Debt-to-income ratio requirements. 3) Minimum job history, calculation of bonus and overtime pay.
A specific example: Freddie Mac has a loan program requiring only a 1 year tax return for approval (20% down) vs. (all) banks have a 2 year requirement. Overlays stem from the housing downturn when Fannie/ Freddie forced “buybacks” on banks, loans sold to them just before borrowers defaulted. Buybacks can also result when a mortgage application is poorly underwritten by lenders or because of other violations (fraud). Buybacks are the lowest level in 4 yrs. according to Inside Mortgage Finance. But experts say banks are sticking to their additional requirements to avoid ... more

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