Lenders are at it again! Changes, changes, changes... One of the latest is a lovely new application disclosure titled "Undisclosed Liabilities".
Lenders must determine that the liabilities up to and concurrent with the closing are used in evaluating the qualifications of the borrowers. What does this mean you ask? Well for one thing it would be virtually impossible for lenders to pull an updated credit report of liabilities and re-underwrite the loan if necessary, while buyers and sellers are sitting at the closing table.
So the fun begins 5-10 days prior to closing, as lenders begin to do a trade line comparison for each active liability on the consumer's credit report. Special notice is taken of any newly acquired debt or increase in balances previously reported. Lenders must also address any new credit inquiries. This review allows the lender to see any significant changes without impacting the borrower's credit score.
Dear loan applicant, it is not over until the closing attorney hands you your keys! Please, no new cars, home depot accounts or even a new outfit for closing! Keep your wallet tucked away until you pull up to your new home and unlock the door for the first time as a homeowner.