We all hate to find out the buyer has a hidden prayer that turns out unanswered by the loan approval process.
Before execution, I always call lenders to review their approval/qualification letter to advise my client of the level of risk with a particular buyer. It's a triple purpose due diligence step to evaluate how strong the buyer is, see what has been done to pre-approve the buyer, and let the mortgage officer know their reputation is at stake.
In light of recent unanticipated delays I have decided to put together a new and approved list of questions and get more information to do a better job in evaluating loan contingency risk. We all know sometimes we have to take what we can get but absolutely no one likes surprises.
Until now, I called the lender to ask if the borrower has signed a loan application and submitted full loan documentation. I close by asking how strong the buyer is and how comfortable they are with the buyer. That last open ended question leads into many areas but also can leave out risks the lender might not be sharing. So, I put together this list and would like comments on what else should be asked, not asked, asked in a better way, and what else should be done without crossing confidentiality lines. Here it is. Follow up questions not included.
- Has the borrower been pre-approved or pre-qualified?
- Has the borrower been previously processed through your underwriting system?
- What are your guidelines for issuing a letter?
- Has the borrower completed and signed a loan application?
- Have you reviewed and have in possession the following documentation? Tax returns, wage statements, income and expense statements, leases and documentation of other types of income sources?
- Have you reviewed the borrowers bank statements and verified sources of down payment?
- Is the borrower self-employed?
- Has the borrower been coached not to make changes in their financial situation, marital status, and employment before closing?
- Is the borrower relying on any gifts to help with down payment and closing expenses?
- Have you cross-referenced income sources with income on tax returns?
- Have you looked at MLS to form an opinion about the likelihood of appraisal issues?
- Are your underwriters local and in house?
- Is your appraisal group in house?
- Would you attempt to sell your house to this borrower?
So agents, what do you do? What else should I do?
Comments(13)