www.lasvegasmtg.com Report: New Lender guidelines! Say it ain't so!
by John Le Francois
www.lasvegasmtg.com Report: New Lender guidelines! Say it ain't so! Recently I experienced a new rule that has slowed down the loan process for some very qualified buyers and is not even disclosed as a lender overlay. The delay is over any borrower that has a dispute on their credit report. A dispute with the borrower and the creditor no matter if the account is open or closed, balance or 0.00 balance, has to be removed before the lender will give the borrower approval for a home loan.
The delay is caused by the lender not allowing the dispute being removed with a supplemental credit report but has to be remove at the credit bureau level and the request has to be from the borrowers. With Credit Bureaus having 30 days to respond to any consumer complaints this will increase the delays of closing if the credit report is not scrubbed previously before borrower makes an offer. Within the last week, 4 of our bank lines have now required the disputes to be removed prior to loan approval.
We do not know if this is a new Fannie Mae guideline or if this is a lender specific rule, but as one lender goes so goes the rest. What we do know is that with the proliferation of Credit Repair companies the chalenges the creditor repair companies write to the Credit Bureaus are being challenged using Dispute Letters. In most cases these Dispute lettters remain on the Credit report showing customer disputes the creditor report. This does not resolve or provide answers on why the original complaint was filed.
When Underwriters see Dispute on the borrowers credit report this creates red flags that borrowers has not demonstrated the ability to pay on credit obligations. Now, it will be required to have the dispute removed as soon as it is discovered prior to loan being submitted to the lender.
In the Mortgage business the "Only thing that remains constant is change!"