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When Do Mortgage Cos Look at Docs?

Started by NpS • 37 replies • 2663 views

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NpS (Pennsylvania)
Posts: 4,216
Posted:
Does anyone know when and if mortgage companies actually look at HOA docs?

My guess is that they may look at CC&Rs at loan origination, but that's it. Just a guess though.
Sikubali jukumu. Read all posts at your own risk.
TimB4 (Tennessee)
Posts: 21,059
Posted:
Most closing companies ask for specific information.

Based on what we have been asked for (as a fee simple town home community):

A copy of the Associations insurance declaration page.
Amount of assessment
if any special assessment is due or planned
if the Association is involved in any litigation
number of owner occupied
number of entities that own more than one lot
Individual lot account status
when assessments are due
Is water included as part of the hoa assessment
Process/setup fees that need to be collected
Copy of Private Road agreement (it's our CC&Rs but we get asked that a few times).

I've never had a closing company ask for a copy of any of the governing documents.
I've never had a mortgage company ask for a copy of any of the governing documents.

MelissaP1 (Alabama)
Posts: 13,836
Posted:
The mortgage company has no need to look a the HOA rules. They don't always necessarily know there is an HOA. It's not their responsibility to inform you there is one. Remember they don't have to follow the rules either.

However, certain loan types like FHA and now Fannie Mae/Freddie Mac are now requiring a PUD form. Which is what Tim is referencing in his post. It has like 25 questions on it. The President of the HOA usually fills it out behind the scenes of your closing. It basically is the same as a "HOA Appraisal" like your home appraisal. It basically is looking at the overall "health" of the HOA. A higher Rent to own ratio, lawsuits, or outstanding HOA liens are factors. The higher those are, the more interest one may pay on a refinance or loan. More and more mortgage companies are leaning toward this form...

It is viewed as the buyer's responsibility to be informed of the HOA. The documents are public except for the ACC/Bylaws. Those are typically HOA internal documents. There is no need for a mortgage company to provide or look at such public documents.

I will tell you my mortgage company factored in my HOA dues prior to approval. Since dues are required, they are factored in on your debt load. So I could have afforded a $200K house without a HOA or a $175K house with a HOA. They have to factor in dues you pay as you can be liened or foreclosed on for not paying them.
Former HOA President
RichardP13 (California)
Posts: 3,868
Posted:
Contrary to someone's opinion, mortgage companies do know when there is an HOA involved in the transaction, as it has to be noted on the appraisal. In addition, if you live in an HOA when you sign your closing docs, one of the documents is call a PUD or Condo rider and is part of the Deed of Trust or Security Instrument.

When escrow is opened for a resale, and speaking for California now, an escrow company will purchase an association package consisting of MANY documents. They will go to the lender and become part of the documents used to underwrite a loan. The most important piece is the lender questionnaire. If any red flags come up, they will communicate with the agent for the association, which would be me in this case. If there is interpretation needed, I will answer and if additional documents are needed I will forward to the lender. If there is litigation involved, a correspondence from the association's attorney is required to proceed further.

The lender may accept a general questionnaire that is provided or they may require a more exhaustive document, which they will be charged additionally for. There are a couple of service providers who handle this for HOA's, one being CondoCerts and the other HomeWise.

FHA has a webpage on their site listing all approved and certified projects in the United States. Fannie Mae has a similar listing, but as far as I know, it is internal only.

In MOST HOA's, the ACC is part of the CCRs and thus are public. Bylaws are recorded in some states, Michigan being just one.

It is a buyer's responsibility to be informed, BUT is a seller's responsibility to fully disclose.

Not sure where someone is getting the idea that mortgage companies don't have to follow the rules either?

In the 50 properties I managed, not one President ever filled out a questionnaire on behalf of a seller, let alone knew a transaction took place UNTIL the sale was completed and everything signed, sealed and delivered.

Remember, CCRs have clauses written into them that do affect a mortgagee.
NpS (Pennsylvania)
Posts: 4,216
Posted:
Quote:
Posted By RichardP13 on 07/28/2015 8:56 AM
Remember, CCRs have clauses written into them that do affect a mortgagee.


Such as?
Sikubali jukumu. Read all posts at your own risk.
RichardP13 (California)
Posts: 3,868
Posted:
One is Partition and Severability of Project.

If you have a PDF copy of your CCRs, your can open the document and press Control F on the keyboard, type mortgagee to list all references in the document pertaining to that subject.
RichardP13 (California)
Posts: 3,868
Posted:
BTW... There is a new rule being implemented on Oct 3rd called Know before you owe, which has some impact on homeowners looking into purchasing into an HOA.

http://www.consumerfinance.gov/knowbeforeyouowe/
NpS (Pennsylvania)
Posts: 4,216
Posted:
Very helpful Richard. Thanks also to Tim and Melissa.
Sikubali jukumu. Read all posts at your own risk.
MelissaP1 (Alabama)
Posts: 13,836
Posted:
No not all mortgage companies know there is an HOA. If that was a true statement, why are their so many posters who state they did not know there was a HOA? Or better yet, find out the HOA is no longer active or is volunteer only? It is NOT through their Bank... It's through their fellow neighbors/members.

Plus some people buy houses by cash, receive inheritance, or by foreclosure sale. Which means there is no "seller" to provide the HOA documents. The bank does not have a copy. So NOT every home purchase transaction provides the buyer with HOA documents. Don't assume every sales transaction falls into traditional lines.
Former HOA President
RichardP13 (California)
Posts: 3,868
Posted:
Quote:
Posted By MelissaP1 on 07/28/2015 2:41 PM
No not all mortgage companies know there is an HOA. If that was a true statement, why are their so many posters who state they did not know there was a HOA? Or better yet, find out the HOA is no longer active or is volunteer only? It is NOT through their Bank... It's through their fellow neighbors/members.

Plus some people buy houses by cash, receive inheritance, or by foreclosure sale. Which means there is no "seller" to provide the HOA documents. The bank does not have a copy. So NOT every home purchase transaction provides the buyer with HOA documents. Don't assume every sales transaction falls into traditional lines.

Melissa

Listen to yourself think.

If the person got the home through cash, foreclosure or inheritance, there would be no mortgage lender, would there?

I attached a link to a sample Fannie Mae appraisal report. Top section of first page is area for HOA. As appraisals are required for all mortgages, the lender will see that. Maybe the seller lied about living in an HOA, maybe the buyer didn't read their paperwork, what a shock!

https://www.fanniemae.com/content/guide_form/1004.pdf
MelissaP1 (Alabama)
Posts: 13,836
Posted:
Listen to what the OP is asking... Does the mortgage company see the HOA docs? The answer is not necessarily. I am also mentioning the circumstances of which this may happen or explain why may not know there is a HOA. You can NOT rely on your Realtor, lawyer, bank, title search, seller, or HOA to tell you there is a HOA period. You can't go back and blame them for your misinformation...
Former HOA President
RichardP13 (California)
Posts: 3,868
Posted:
Quote:
Posted By MelissaP1 on 07/28/2015 2:56 PM
Listen to what the OP is asking... Does the mortgage company see the HOA docs? The answer is not necessarily. I am also mentioning the circumstances of which this may happen or explain why may not know there is a HOA. You can NOT rely on your Realtor, lawyer, bank, title search, seller, or HOA to tell you there is a HOA period. You can't go back and blame them for your misinformation...

I saw what the OP wrote and the answer is yes, they do look at HOA docs. Underwriters look at them all the time, especially with the new rules. You pay cash, or get through, well, buyer, you're on your own. You buy a used car, AS IS. Don't do your homework, you may be screwed. Do things fall through the cracks, absolutely, BUT then did the seller fully disclose?

Your statement, You can't rely on your....HOA to tell you there is a HOA". If they can't, you are in big trouble!
RichardP13 (California)
Posts: 3,868
Posted:
meant to say get through foreclosure.
RichardP13 (California)
Posts: 3,868
Posted:
BTW, I could tell if a property is in an association, by looking at a title report because the legal description generally will say they is a condo plan and the security instrument which is recorded will have a rider on it, PUD or Condo.

Real Estate professionals, bankers, lawyers and yes, mortgage companies have access to the dame information.

Yes, its the same buyers who drive by a monument stating their community name as they enter through the private gates. But, no one told us.
MelissaP1 (Alabama)
Posts: 13,836
Posted:
Are you confused on something or been in Colorado lately? The point is that HOA documents can get by-passed without being viewed by any party involved in a sale. That is my point. Don't rely on anyone involved in your home purchase to be informed of the HOA, inform you of the rules, or give you a legal break down translation. You the buyer is responsible for being informed. How you do it is up to you or already part of the process...
Former HOA President
RichardP13 (California)
Posts: 3,868
Posted:
Melissa

Confused, about what? The OP asked about mortgage companies looking at docs, which they do, I know, been there, done that. You bring up a cash sale or foreclosure, there is NO mortgage banker unless there is a loan, now is there?

You maybe from Alabama where they may not have such rules, but California has rules to help protect a buyer. Just because you have to get the horse to the well, you can't make him or her drink from it.
RichardP13 (California)
Posts: 3,868
Posted:
Melissa

I have attached a PUD rider for the story John posted on the military family who found squatter occupying their property. Took me all of 5 minutes to find.

Thread was called news headline.
📎 Attachments (1):

⏸ Downloads temporarily unavailable

📄172851156071.pdf(55 KB)
MelissaP1 (Alabama)
Posts: 13,836
Posted:
We are all from different states for the last time... So our advice given should make one THINK of a possible solution and put them in a direction. They then have to make the additional effort to see if it applies in their own state... Stop giving advise based in Califormia and scoff at others... We bring perspective here not statism...
Former HOA President
RichardP13 (California)
Posts: 3,868
Posted:
The OP asked if mortgage lenders looked at HOA docs. The answer is yes. This is not a state thing, its a mortgage thing. What solution do you want us to bring to the table?

You are the one that said they don't look at the docs nor do have any reason. Really, what about risk? Let's see 50% delinquency, 80% rentals, no reserves, three lawsuits, want me to continue? You mention a PUD form, its a HOA or lender questionnaire. PUD is a specific type of HOA. Don't think you will ask for a PUD form in a Condo, just saying.

You don't pay a higher rate for a condo's health, if they see the risk as too high, they won't lend. Do you know that for a fact? Look at Nevada. It may be soon where lenders will stop making loans because of the "Super Lien Priority" effect. Too much risk for a lender or investor to take.

These are the facts.
MelissaP1 (Alabama)
Posts: 13,836
Posted:
No Richard they do NOT read the HOA documents. What do they read? The TITLE on the paperwork stating there are CC&Rs and Articles of Incorporation. That is all. They may acknowledge there is a HOA and then request a PUD form be attached.

The mortgage company is not going to read the rules of where you can only grow grass 2 inches etc... What do they care? They do not have to obey the rules. They just may recognize a HOA existence.

Btw... Who is providing them with these HOA documents to read? The seller is responsible for turning over to the buyer at or by closing. So when is your mortgage officer to get a copy to read and by whom? Otherwise they only care about making a check mark that the PUD form IF required is checked and filled out by the HOA.

Reading the rules? Why if only have to acknowledge they exist?
Former HOA President
RichardP13 (California)
Posts: 3,868
Posted:
Quote:
Posted By MelissaP1 on 07/28/2015 4:26 PM
No Richard they do NOT read the HOA documents. What do they read? The TITLE on the paperwork stating there are CC&Rs and Articles of Incorporation. That is all. They may acknowledge there is a HOA and then request a PUD form be attached.

The mortgage company is not going to read the rules of where you can only grow grass 2 inches etc... What do they care? They do not have to obey the rules. They just may recognize a HOA existence.

Btw... Who is providing them with these HOA documents to read? The seller is responsible for turning over to the buyer at or by closing. So when is your mortgage officer to get a copy to read and by whom? Otherwise they only care about making a check mark that the PUD form IF required is checked and filled out by the HOA.

Reading the rules? Why if only have to acknowledge they exist?

Ever work for a mortgage company Melissa?

A questionnaire, filled out by an HOA or their agent is an HOA doc. Do they read every doc, no and it wasn't the OP question. It was do they look at them? Th question has been asked and answered.

Who was providing these doc, well in my case I was, and to boot, we were making $5K per month for providing the docs. God I love this industry, oops, whatever you call it, a lobbying group. Great job lobbyists!
NpS (Pennsylvania)
Posts: 4,216
Posted:
Quote:
Posted By RichardP13 on 07/28/2015 3:16 PM
Yes, its the same buyers who drive by a monument stating their community name as they enter through the private gates. But, no one told us.


2 funny.
Sikubali jukumu. Read all posts at your own risk.
MelissaP1 (Alabama)
Posts: 13,836
Posted:
Funny... finally admit they do not read the documents... They just read the PUD document...
Former HOA President
RichardP13 (California)
Posts: 3,868
Posted:
Think you have been off your medication too long.
SylviaS3 (Virginia)
Posts: 4
Posted:
Hello All,
As someone from the mortgage industry and still employed by a mortgage lender, I can tell you I have probably a dozen sets of condo docs I've collected over the last couple of decades and can say with certainty, we (mortgage bankers) do, under various situations require and read HOA docs; specifically CC&Rs, By-Laws, budgets, articles of incorporation, legal description, master plat to name a few. When might this be required? Usually for verification. An example, when we need to see the CC&R to verify that the HOA fee covers the private roads is probably the most common reason. (We have to find the definition of common area and then the description of what the HOA dues cover). There are many other reasons and it depend upon the type of ownership (fee simple vs condominium).

Condos are approved for financing on a short term basis. FHA approvals are only good for 2 years. VA approvals are until they are removed for a reason. Fannie and Freddie have different processes, depending on new or resale, or down payment (limited review with more down). I've been involved with approval for about a dozen condos (why I have the docs) The lender's questionnaire is used to screen the condominium from being ineligible for financing in the secondary market and must be dated within 90 days of closing (generally) The condo docs are used and read to get the condo back on an approved list with any agency at any time (brand new or resale). Key red flags are delinquency rate, # of multiple unit owners, inadequate reserves, ANY pending litigation, excessive non owner occupied units.

Fee simple PUDs are now reviewed for some of the same red flags, but not with the same intensity. Both require adequate reserves, Fidelity Bond (general liabilty coverage) of at least $1M on the BOD, and sufficient insurance between the owner's policy and the HOA master policy. Again, pending litigation, no matter how minor is a real game changer and can prevent a home from closing.

I've seen too many communities lose their ability to find financing on the secondary market, pushing them into cash buyers only. Values drop very quickly when this happens. Then the short sales and foreclosures start to fester. It's not the position anyone wishes to be in.

Back to reading!
RichardP13 (California)
Posts: 3,868
Posted:
Thanks Sylvia
KerryL1 (California)
Posts: 14,550
Posted:
I appreciate your knowledgable info too, Sylvia! Couple of questions:

What percent fully funded reserves poses a risk?

Another poster just asked this one: do you know how much is typically charged to help a condo get FHA certification? Or maybe this isn't something you'd deal with.
NpS (Pennsylvania)
Posts: 4,216
Posted:
Thanks Sylvia. More questions. Did this level of diligence start after 2008? Or was it common practice before?
Sikubali jukumu. Read all posts at your own risk.
SylviaS3 (Virginia)
Posts: 4
Posted:
I will have to emphasise these guidelines are constantly moving and vary from agency to agency.

Typically, Fannie wants an annual budgeted replacement reserve allocation of 10%. (Divide the annual reserve allocation by the annual budgeted assessment income). In some cases, a reserve study can be used in place of the 10% reserves. That's a bit more involved when using a reserve study.

There are contract processors highly experienced in project approval for FHA. (If anyone pays for that, they may as well get the price to also file for VA if they don't have it, its not that much added and far easier than FHA). The price depends on many things, amenities, master associations, availability of documents (are you going to have to pay for a reserve study? Updated plat? And so on). That said, I had a small condo project, 20 units, brand new, master association, minimal ammenities and I was getting quotes of $2000 to $3500. Keep in mind in 2011/2012 FHA changed how they approve condos and have capped the number of loans for each project at 25% for maximum exposure (at least at last look, it may have relaxed, but ask the contractor before shelling out big bucks).

When I said FHA changed the approval process, they have two methods: HUD review of condo docs (HRAP) it lender reviewed (DELRAP). If the lender approves the documents, they must post it on the HUD website, and, all other lenders may use that approval. HOWEVER, if there is an error, that lender assumes all liability for closed loans since their approval. The result is HRAP is almost exclusively used in the industry. There are some exceptions, some lenders will take on the risk and the last fee I heard charged for the service was $750 and only for that one section or phase, not the whole project (limiting liability). Usually the seller pays the fee).

I cannot think of a reason (doesn't mean it doesn't exist) for an existing condo project to submit for Fannie approval - they have a computer program for lenders called CPM, or Condo Project Manager that tracks data. It can read if there is an extremely financially healthy project that may be skewed on investor concentration. CPM will approve it in a heartbeat. Each lender's CPM approval has a validity period (thinking 60 days) AND IS ONLY GOOD AT THAT LENDER. So, lender A pulls a questionnaire and issues a project approval (for that loan only). Two weeks later Lender B pulls a questionnaire and cannot get an approval via CPM. Lender B must reconcile the issue, or the buyer can trot down to Lender A provided they can close with 60 (or 90/not sure) days of their original approval.

The last question, yes, many, most changes occurred after or in conjunction with Dodd-Frank in the beginning of our current decade. Agencies saw their exposure to foreclosures in condos skyrocket and the impact snowballed into rapid declines in value, coupled with the inability to obtain financing, which once again, led to a increase in foreclosures. Condos took a beating in the mortgage crisis and just now starting to pull out. It's been a long road and I fear the pendulum swung too far into crazy and Dodd-Frank will be found to have crippled the housing industry, but nothing will happen in the immediate future. Be prepared to continue to crank out the mortgage info to keep things moving on.

I'm curious how many use property management companies to handle their questionnaires? My observation has been the majority of these companies use a cloud server and many of the members of the BOD would be appalled at the lack of service to address inconsistencies, not to mention the outrageous charges for something we all know is just sitting there and is for the most part, automated retrieval. I know it pays the bills argument, or, everyone else does it response, but you don't know the rest, because no one will take the time to complain about getting docs. When was the last time you blindly tested your PM obtaining a lender questionnaire or tried to obtain docs as a seller? Do you know your HOA's first impression, before the buyers even move in? Try having a coworker leave a message and/or have them send an email with a general question to your PM. I realize in many cases its a matter of lesser evils, but it's also the difference of being a desirable sale. Realtors do know the "difficult" ones, and while they may not say anything overt, just the showing order can determine what listings are viewed. Know who is representing you and how they look at others (that aren't paying them).
NpS (Pennsylvania)
Posts: 4,216
Posted:
Very informative. Thanks so much.
Sikubali jukumu. Read all posts at your own risk.
RichardP13 (California)
Posts: 3,868
Posted:
Quote:
Posted By SylviaS3 on 08/01/2015 9:59 AM
I will have to emphasise these guidelines are constantly moving and vary from agency to agency.

Typically, Fannie wants an annual budgeted replacement reserve allocation of 10%. (Divide the annual reserve allocation by the annual budgeted assessment income). In some cases, a reserve study can be used in place of the 10% reserves. That's a bit more involved when using a reserve study.

There are contract processors highly experienced in project approval for FHA. (If anyone pays for that, they may as well get the price to also file for VA if they don't have it, its not that much added and far easier than FHA). The price depends on many things, amenities, master associations, availability of documents (are you going to have to pay for a reserve study? Updated plat? And so on). That said, I had a small condo project, 20 units, brand new, master association, minimal ammenities and I was getting quotes of $2000 to $3500. Keep in mind in 2011/2012 FHA changed how they approve condos and have capped the number of loans for each project at 25% for maximum exposure (at least at last look, it may have relaxed, but ask the contractor before shelling out big bucks).

When I said FHA changed the approval process, they have two methods: HUD review of condo docs (HRAP) it lender reviewed (DELRAP). If the lender approves the documents, they must post it on the HUD website, and, all other lenders may use that approval. HOWEVER, if there is an error, that lender assumes all liability for closed loans since their approval. The result is HRAP is almost exclusively used in the industry. There are some exceptions, some lenders will take on the risk and the last fee I heard charged for the service was $750 and only for that one section or phase, not the whole project (limiting liability). Usually the seller pays the fee).

I cannot think of a reason (doesn't mean it doesn't exist) for an existing condo project to submit for Fannie approval - they have a computer program for lenders called CPM, or Condo Project Manager that tracks data. It can read if there is an extremely financially healthy project that may be skewed on investor concentration. CPM will approve it in a heartbeat. Each lender's CPM approval has a validity period (thinking 60 days) AND IS ONLY GOOD AT THAT LENDER. So, lender A pulls a questionnaire and issues a project approval (for that loan only). Two weeks later Lender B pulls a questionnaire and cannot get an approval via CPM. Lender B must reconcile the issue, or the buyer can trot down to Lender A provided they can close with 60 (or 90/not sure) days of their original approval.

The last question, yes, many, most changes occurred after or in conjunction with Dodd-Frank in the beginning of our current decade. Agencies saw their exposure to foreclosures in condos skyrocket and the impact snowballed into rapid declines in value, coupled with the inability to obtain financing, which once again, led to a increase in foreclosures. Condos took a beating in the mortgage crisis and just now starting to pull out. It's been a long road and I fear the pendulum swung too far into crazy and Dodd-Frank will be found to have crippled the housing industry, but nothing will happen in the immediate future. Be prepared to continue to crank out the mortgage info to keep things moving on.

I'm curious how many use property management companies to handle their questionnaires? My observation has been the majority of these companies use a cloud server and many of the members of the BOD would be appalled at the lack of service to address inconsistencies, not to mention the outrageous charges for something we all know is just sitting there and is for the most part, automated retrieval. I know it pays the bills argument, or, everyone else does it response, but you don't know the rest, because no one will take the time to complain about getting docs. When was the last time you blindly tested your PM obtaining a lender questionnaire or tried to obtain docs as a seller? Do you know your HOA's first impression, before the buyers even move in? Try having a coworker leave a message and/or have them send an email with a general question to your PM. I realize in many cases its a matter of lesser evils, but it's also the difference of being a desirable sale. Realtors do know the "difficult" ones, and while they may not say anything overt, just the showing order can determine what listings are viewed. Know who is representing you and how they look at others (that aren't paying them).

Sylvia

I can answer you on the last paragraph. We use CondoCerts to handle all escrow demands upon an HOA. Once an order comes through, it takes 5 minutes to process.

In California, we have an annual disclosure that must be sent 30 days prior to the end of an association's fiscal year. Between Dec 1 and the end of the year, all associations are updated to comply with any law changes. Any mid year changes are handled on an association by association basis.
GenoS (Florida)
Posts: 4,276
Posted:
Interesting stuff. The crack about Dodd-Frank I found most interesting of all. I suppose those whose business it is to re-inflate Housing Bubble 2.0 would be the first to whine that the new regulations are onerous. Cry me a river. Other than that, the factual information is good, Shiela, thank you for that at least.
SylviaS3 (Virginia)
Posts: 4
Posted:
Quote:
Posted By GenoS on 08/01/2015 2:29 PM
Interesting stuff. The crack about Dodd-Frank I found most interesting of all. I suppose those whose business it is to re-inflate Housing Bubble 2.0 would be the first to whine that the new regulations are onerous. Cry me a river. Other than that, the factual information is good, Shiela, thank you for that at least.

Wow, really? You must not watch much financial news Deno. Do you even know what is in Dodd-Frank? You and I are blessed to have the opportunity to be homeowners. But the Committee for Financial Services in the House summarized it best here:
http://financialservices.house.gov/news/documentsingle.aspx?DocumentID=399392

There are millions of hard working Americans that want to buy, but this (intractable) legislation paralyzed many. I suspect if it were your home being refinanced where you were going to save $300 a month and your appraiser (from another state because you could not select that individual) made a gross mistake, but after correcting the mistake still wouldn't amend the value accordingly, you wouldn't say a word? Even when your only option was to walk away from your locked rate at 3.5% and the market is now over 4%? Even the president acknowledged the over-reach when he issued an Executive Order lowering the FHA insurance earlier this year. The stories are many and all over the web, but to give a taste:

Here are six borrowers who were denied a mortgage:

1. 27% LTV. A couple with a 780 FICO score who wanted a $300K loan on a $1.1 million house and would have $300K in reserves after closing, but whose verifiable income was only 30% above the proposed mortgage payment.

2. 801 credit score. Newly retired couple with fantastic 801 credit score, $1 million in retirement accounts, and $400,000 in savings after they were going to put down $350,000 on a $550,000 home purchase, but whose Social Security income was less than double the proposed mortgage payment.

3. Affluent business owner. Owners of a small retail business who were turning the business over to their children to manage, with the intent of collecting dividend income; who had $500K in cash savings and wanted a 50% LTV.

4. Relocating borrower. A US citizen who has been working overseas takes a job in the US, has a 700 FICO, 20% down payment, and plenty of reserves, but cannot produce a W-2 because he do not exist in the country in which he was working and hasn't started his new job yet.

5. New employee. A prospective borrower qualified in every way except she had only been in her current job for five months and had worked in the family business previously where she did not get a W-2.

6. Loan = 15% of applicant's assets. A retiree who wanted a 50% LTV and had assets six times the proposed loan amount was turned down and eventually paid cash.

So, next time why not ask questions instead of insinuating all I am concerned about is the Almighty buck? We have an entire block of Americans in serious housing trouble, again, and these folks have excellent credit and had nothing to do with the foreclosure/short sale fiasco. I am the first to agree, controls were needed, but it was taken way too far. This legislation is slowly eliminating the community bank. I know this too painfully well as my most recent favorite employer bank threw their hands up, it was too expensive to stay in and a subsequent regional bank was purchased by a much larger bank, one I would never work for. Are you aware community banks have declined by 41% and at least one Fed Bank is placing a chunk of blame on this legislation? Even more disturbing, community banks are not even attempting to start anew. Here's some more facts for you:

http://america.aljazeera.com/articles/2013/12/10/study-rental-housingmoreunaffordablethaneverbefore.html

http://www.entrepreneur.com/article/244573

A former industry colleague wrote this (opinion piece) paper why this legislation is hurting us is written by Dave Hirshman:

http://www.gazettextra.com/20150723/con_dodd_frank_is_hurting_consumers_and_the_economy_it_needs_a_complete_overhaul

If you really want to read up on this, there's a working paper, a simple Google will bring up, "How Small Banks are Fairing Since Dodd-Frank. If you get a 105 page document, originated at George Mason University, that is the correct document. Bye-bye to the small bank.
KerryL1 (California)
Posts: 14,550
Posted:
I very much appreciate your lessons, Sylvia. Thank you.

(Normally, Geno is a decent fellow.)
RichardP13 (California)
Posts: 3,868
Posted:
I was in the mortgage industry when Fannie Mae and Freddie Mac were taken over by the government. What I find really appalling is that Barney Franks, who's name is on the Dodd-Frank bill, had a boyfriend who was third in command of Fannie Mae and was given a $50M golden parachute, told the American people and Congress only a couple of months prior to going into conservatorship that everything was alright. Seems Chris Dodd also got a favorable mortgage rate from Countrywide.

The examples Sylvia provided are great, but sadly, they are also real. While change was needed, this wasn't the correct legislation to do that.
GenoS (Florida)
Posts: 4,276
Posted:
Barney Frank was as corrupt as the day is long. As for his boyfriend, Frank did recomment him for the job at Fannie Mae but he was nowhere close to being 3rd in command and when he left in 1998 - well before the crisis - he didn't get a golden parachute let alone one worth $50 million. Most of your other points are valid but that one borders on the lonney-toon fringe.

KerryL1 (California)
Posts: 14,550
Posted:
Thanks for the correction, Geno. Oaccasionally, Richard does come up with unsubstantiated tales.
RichardP13 (California)
Posts: 3,868
Posted:
Quote:
Posted By KerryL1 on 08/02/2015 7:24 PM
Thanks for the correction, Geno. Oaccasionally, Richard does come up with unsubstantiated tales.

Really?

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