Seriously, we verify and document everything!
I would never come right out and call someone a liar because that would be bad for business and afterall it could just be a series of miscommunications. The thing about obtaining a mortgage though is that everything and I mean absolutely EVERYTHING needs to be documented. Everything that you tell your loan officer will be verified before we get to a closing, believe me!
So, I took an application sometime last month and while these people were not the best borrower's in the world they had pretty decent credit and were qualified for the loan. I was a little skeptical because of their ages, at just 19 years old, but I DO NOT DISCRIMATE in anyway under any circumstances. If you are legally an adult and qualified for a mortgage loan I will work with you.
Now, these people were qualified for a USDA Rural Housing loan so I issued a pre-approval. The only thing was that while they said that they had funds needed to close it was not in their bank account. I sent them an email two days before they were scheduled to meet with their agent to get an offer together. I told them in the email that they are pre-approved and all set to make an offer but to put the funds needed for closing into their bank account. By the time this thing was underwritten we'd be working with seasoned funds but it was imperative that they get that money into their account ASAP. I also told them not to move funds around until after the closing.
They replied to my email saying that they would get that money into their account "pronto" and I took them at face value. Their offer was accepted and they came in to our office to sign disclosures a couple of days after we opened a file for them. They hadn't made the deposit yet but they did put down a $500 earnest money deposit. I reminded them again to make that deposit into their account right away and so did my business partner. As they were leaving my partner hollered out to them "Get that money into your account!" They assured us that they would and again I took them at face value.
Everything seemed to be going really smooth on this transaction. Appraisal came back good, title was in, and a conditional approval issued. It was time to collect the conditions, submit them, and wait on the clear to close. the conditions seemed simple enough. I had to get up to date bank statements or most recent prinouts signed by a bank rep showing funds needed to close, had to source a couple of small deposits, and get some information on the repayment type on student loans. I knew that the student loans were in deferrment but I needed some proof of that because sometimes that changes without being reported to the credit bureaus.
It was June 29th when the conditions were issued and the bank statement wasn't going to be issued until July 1st. I wanted to expedite this file because I knew the buyer's and seller's agents and wanted to get this done for them quickly. The borrowers wanted to close as soon as possible and the home was already vacant. I had a handy Borrower Signature Authorization on hand signed by both borrower's so I called up their bank, faxed over the authorization, and got a prinout signed by a bank rep. This is where I ran into the first BIG RED FLAG. Funds needed for closing were not in the account.
I contacted the borrower and told her that I obtained a copy of the prinout and she immediaately got upset. She said that no-one had told her that we were going to get that and that if someone had told her that she would have made sure the money was in the account. The thing is I had told them both from day one that I would be obtaining documents on their behalf, that I needed a bank statement showing funds needed for closing, and that they deposit needed to be made into their account ASAP.
The following day I received an email telling me that they made 3 seperate deposits into their account as funds needed for closing. That makes it more difficult because the funds are not seasoned and they are 3 seperate deposits that need to be sourced. Even worse, they had been moving small sums of money around all month. I sourced those 3 deposits, gathered up the original conditions, and submitted them.
That opened another can of worms because none of the 3 deposits on their own was enough for funds needed for closing and there were a handful of other small deposits. I was issued another handful of conditions the following day. There were 4 deposits in particular that were above average size that needed to be sourced. I asked the borrower's about them, they denied having made one of the deposits, and said that the other deposits were child support. He told me that his parents had agreed to pay him child support directly to help him with his expenses until he completed college, turned 21, or whichever came first. I asked him for a copy of the child support order. He told me that his mother told him that there was no child support order in place and that his parents has always just agreed to make the payments to him. Those deposits were not the same each month so when I inquired about that he told me that on his mother's months they total $496 and on his father's month they total $600. I asked him for cancelled checks to show this which he was unable to provide because his parents actually transfer the money from their accounts into his. The other deposit that he initially denied making he admitted to after I pulled the accounts up and told him which day the deposit was made. He then remembered that it was from the sale of a couple items on Craigslist; an Xbox and a bookshelf. I asked him for the receipt for the sale of the items and he said that he didn't get a receipt. I asked him to contact the people that he sold the items to in order to obtain a receipt and according to him those people were unwilling to provide a receipt. After some digging I learned that there actually was a court order in place. His father provided documentation showing me that his wages are actually garnished $125 each week, paid to the mother, and she makes all of the deposits into his account via transfer. His mother was unwilling to provide a copy of the order or a signed authorization so that I could obtain it.
After all of this I made a suggestion that maybe we negotiate an extension on the contract and that he make the deposit in one single large enough for closing deposit, stop moving money around, and ask his mom to stop making unverifiable deposits into his account. He replied to that suggestion by telling me that his hours were cut at work. I called his employer for a verbal VOE, in an effort to help him, so that I could issue a denial letter, and he could get his earnest money deposit back. His employer confirmed what I suspected which was that he lied about his hours being cut.
This was the smallest deal that we had all month and I put more work into it than any of our other files. I was not going to issue a denial letter because they were approved pending conditions that I believe could have been satisfied if they had told the truth and been willing to cooperate with us. This was a referral from an agent that we do a lot of business with and I know the listing agent. After I told them that
the file will eventually be withdrawn due to their failure to provide the required conditions they called corporate and got a commitment from them to issue a denial letter. Then they called another local agent, whom I did not know until that point had shown them the home first, and told her that my business partner and I had told them not to work with her; this was completely fabricated. That is something that I would never do! I would never try to take business from one agent whom a borrower/buyer has a relationship with and give it to another.
I told them from day one that everything that they told me would be verified and documented as it is on all files. Trying to work with them has been rife with inconsistencies and untruthful statements. In the end these people were denied! I will be so glad to put them far back in the rear view. Good Riddance!
And remember, if you are applying for a mortgage loan please be completely honest with your loan officer because everything will be verified and documented!
Thanks for reading! Comments are always welcome and appreciated!!!