Boomerang Buyers, (those who have had a past short sale or foreclosure) are coming back into the housing market and loan originators who assist these folks with a new mortgage are going to need to hone up on research skills.
Even though there had to be a valid hardship to get be approved for the actual short sale, the hardship and circumstances surrounding a short sale will be looked upon differently when applying for a new mortgage afterwards. Those who have been in the mortgage industry for any length of time probably remember the days of the RMCR where supplements needed to be added to correct credit errors. Today, lightning speed for credit reports done in seconds is required by the industry. But with the unprecedented events that have occurred in the last 7-8 years, the need for loan originators to slow down and “get the story and credit” right is more important now than ever before.
Lenders are starting to see an increase of mortgage files for boomerang buyers, but they caution us that loan originators need to thoroughly review documents to make sure that what is necessary to approve these clients is there upon submission. United Mortgage Corp. Sales Director Jason Frangoulis states, “it’s got to make sense. Hardship had to be apparent and it’s got to be documented.” And even though more lenders are underwriting those with a short sale or foreclosure in the past, these same lenders are reluctant to promote this as a service. “Some of the files we are getting are sloppy and not well documented. We look like the bad guy when we have to turn down one of these loans because it was not well put together,” claims an anonymous lender.
So we decided that www.HousingCrisisStories.com has to be more than just a place where Boomerang Buyers and Distressed Homeowners get assistance. We also need to assist loan originators with what documentation is needed. Letters of explanation need to be backed up with any matching documentation available, and credit MUST be correctly represented on the mortgage credit report. Yes, you may need credit supplements for accurate dates and you might have to submit to Fannie Mae or Freddie Mac’s automated system more than once. Your borrower may need to go back to the short sale lender for missing documentation. There is no doubt this is not an easy job.
If it doesn’t make sense to you, it won’t to an underwriter. DIG DEEP. Get the details. Ask questions. Let there be no doubt your client had a hardship. And in the end, if the story does not make sense and can’t be proven, give your client future options.
The hope is that the Help Network on HousingCrisisStories.com can grow with industry professionals that learn how to assist the 7.3 million projected consumers who will be eligible to re-enter the housing market within the next 8 years.