Mortgage application process to get easier
By JEFF LAZERSON / CONTRIBUTING COLUMNIST
Loan officer Jeff was so excited that I could have flown home on a cloud after learning about upcoming borrower opportunities at the annual Mortgage Bankers Convention held in Boston earlier this week.
Taxpayer Lazerson cries out for common sense, knowing that some of this is going to end badly.
Here’s Freddie Mac’s streamlining loan decision: Complete a loan application. Send your loan officer a copy of your driver’s license. Sign disclosures and consent forms. Your part of the application process is just about done.
Forget paystubs, W-2’s, tax returns and bank statements because Freddie is going to handle that. You might not have a $525 appraisal fee either. Your loan officer will chase down escrow instructions, title report and HOA documents.
Less pain. Less hassle.
When available, Freddie is going to use big aggregators that will share data to validate your income and assets to assess your creditworthiness via its automated Loan Advisor Suite.
If you have sophisticated corporate and personal tax returns, don’t worry about it. Freddie will figure it out and calculate it. Nice. Talk about streamlining!
No credit scores? No problem.
Freddie will assess that as well through its mega-data aggregators and render a decision. Wow! Freddie estimates that 25 percent of all residential properties will be eligible for property appraisal waivers on purchases and refinances. That means no appraisal fee.
Fannie Mae wants mortgage loan officers to get your asset account credentials (passwords), a slightly different streamlined avenue.
In my view, only a meshugeneh (Yiddish term for crazy person) would want to give up his or her passwords.
You are exposing yourself to yet another someone stealing your assets in exchange for a little more convenience.
You are also exposing yourself to cyber meandering of your various accounts. Everyone in the mortgage business is mandated to report suspicious activity to Uncle Sam. There are alarmists with no criminal justice knowledge and no common sense who could drop a dime to Big Brother and cause you needless grief.
Starting now, Fannie is going to ignore any business income losses, be it separate corporation, partnership income or schedule C, so long as there is offsetting qualifying income.
For example: Happy Hillary makes $400,000 annually working for the government. Her purchasing partner, Delightful Donald has millions of dollars of losses on his tax returns. We ignore Donald’s losses because Fannie now views this as a lagging indicator. We’re qualifying and approving them on the strength of Hillary’s salary. My goodness!
Unlike Freddie, Fannie’s Desktop Underwriter validation process will only calculate self-employed tax return income for borrowers with schedule C income on his or her 1040 tax returns. If you have a separate corporation or partnership(s), then it’s time to cough up your tax returns.
Fannie appraisal waiver consideration will be on refinance applications only.
Next week’s column will provide you with other programs and trends that I learned at the convention. In two week’s I’m going to give you my take on what’s to come in housing for you and your family as a result of my convention experience.
Jeff Lazerson - Mortgage Columnist since 2011