When is a commitment a commitment?

By
Mortgage and Lending with NE Moves Mortgage, LLC

cut up your credit cards while applying for a mortgageLenders 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.

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Topic:
Lending / Financial
Location:
Massachusetts Middlesex County Cambridge
Groups:
All About Mortgages/Mortgage Networking
1st Time Buyers
Mortgage Professionals
Tags:
disclosures
mortgage
commitment letters

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Rainmaker
779,277
Robert Rauf
HomeBridge Financial Services (NJ) - Toms River, NJ

Kevin, So much of this is common sense, but over the years I have seen buyers do some silly things, like spend their down payment money on new furniture, or celebrate their approval by going on vacation.. We all have to make it part of our script "dont buy anything, dont spend any money, and if you have to, call me first!"

Aug 04, 2010 05:45 AM #1
Rainmaker
601,487
Donne Knudsen
Los Angeles & Ventura Counties in CA - Simi Valley, CA
CalState Realty Services

Kevin - LOL at Rob's comment - sounds just like me to my borrowers.  Regardless of how much I pound it into their heads emphasize this message, over the years, I have had some borrowers do some incredibly STUPID things.  AAARRRGGGHHH!!!

Aug 04, 2010 05:49 AM #2
Rainmaker
342,854
Elizabeth Bolton
RE/MAX Destiny Real Estate Cambridge, MA - Cambridge, MA
Cambridge MA Realtor

Hi Kevin ~ The last thing we want is for a sale to potentially fall apart because the homebuyers started buying their furniture before the closing.  Great post!

Aug 04, 2010 07:13 AM #3
Ambassador
644,120
Larry Lawfer
YourStories Realty Group powered by Castles Unlimited® - Newton, MA
"I listen for a living." It's all about you.

Kevin, Sage advice you offer.  I have heard many closings of late being held up because the buyer went and stocked up at Home Depot too soon.  Asking questions constantly can keep your clients on track, or not.  That is life. That is real estate. Thanks for your post

Aug 31, 2010 10:13 AM #4
Rainer
38,749
John J. Dean, Jr.
Engel & Voelkers Boston - Boston, MA

Kevin

Thanks for the tips .. makes sense to me and many buyers think its normal progression to buy things for the new home before the close.  Scary to think that it could crumble their dreams and terminate their funding. 

Thank you for the post and I may have to steal your closing statements to send to my clients after a property goes under agreement.

"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"   -  Perfect

Sep 23, 2010 03:25 AM #5
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Kevin Greeley

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