If you took one sentence, typed it up on a sheet of paper and sent it to 30 different banks, I am guessing you would get 30 different interpretations of what that sentence meant. This sounds like a complaint, but it really isn’t. It works in the favor of my clients. Banks read the Fannie Mae guidelines and they interpret them in different ways. Some banks make the guideline more restrictive, some banks adhere to the guideline exactly as they interpret it.
An example of this theory in motion is a VA client that came to me for a cash-out refinance on their home. It appears the home is mortgage free when you do a title search, however, they had borrowed money from a family member and the mortgage was never recorded. The family member would now like his funds back.
The first bank I went to said, “the VA will not allow you to do a cash-out refinance on a home that does not have an existing mortgage.” When I asked if the mortgage that was in place could be recorded to take care of the issue the response was “yes, but there is a 6 month waiting period”. So, as a broker that has the opportunity to work with over 30 banks, I picked up the phone and asked a second bank how they were handling this VA requirement. They indicated that the mortgage could be recorded and the loan could be done the next day.
My message here is that just because a potential home buyer may have been turned down by one bank for their pre-approval, it does not mean that they cannot get a mortgage. I find my most loyal clients are those that have been told “no” elsewhere!
