What's even worse is you probably don't have the time to pull the loan from these people and go elsewhere. The incompetence of some people scares me sometimes. Sorry to hear of your experience.

First of all, how did this broker NOT know your husband was self-employed? She would have had to ask for W-2's from each of you, right? What did you give her? This is a very serious mistake for a broker, she sounds inexperienced. The very 1st questions they ask is about employment and how long you have been at your job. Do you get bonuses, commission, etc.

I would pull the loan (depending upon your extension timeframe) and go with someone else. You probably WILL have to do a stated income loan with hubby's self-employment. Interest rates are usually a little higher, but you can refi down the road I would guess.

Well, I'm going to be a party-pooper on this one. Sounds, to me, like you were intending to purchase this property with a 97% mortgage plus 3% bond money. Correct? So, no money down on your part? Are you sure you can afford this house? No money down mortgagees have a high default rate. It's called a sub-prime loan and it's what you're hearing about all over the news right now. Just yesterday, part of the market's drop was attributed to concerns over the declining health of sub-prime lenders. Lenders across the country are tightening their credit standards to reduce the number of these loans. I'm surprised nobody else has mentioned this regarding this posting....?

Sometimes in life, our greatest gifts are unanswered prayers.

Tricia

I had a similar experience 15 years ago as a first-time homebuyer. Three days before the closing, the bank suddenly refused to finance me because I was self employed, despite excellent credit and a 20% downpayment. They required a cosigner (my mother generously and kindly agreed to help). After owning the house for a year, I refinanced in my name only.

Triciae has a really, REALLY good point, though.

It sounds like she doesn't have an investor to fund it.
"so you have to put NO money down now"

A first time buyer would think that sounds very nice, but really that's the first alarm bell:

Why *would* you expect to have to shell out any money at that point?

Many mortgage brokers work on the theory that, if they just submit enough applications on enough sales to enough investors, *something* will close.

& they'll promise anybody anything to keep the buyer on the hook until they've exhausted all their possibilities.

"Pre-approval" letters from mortgage brokers are meaningless:

I can make up letterhead on the computer & send out pre-approvals all day long that are worth just as much...nothing.

Assuming that there is an investor out there who'll do a 97% loan (maybe FHA?) & that there's bond money available, & that you really do qualify in the real world:

Take your docs to another lender pronto (bet your Realtor has lenders that she's used in the past that may be able to do a fast closing),
don't inflame the seller any more, just try to keep him/her on an even keel & get a commitment letter from a real lender,
& keep in daily contact with your Realtor.

I wish you the best.

Agree with the above post. Ask your realtor to explain the situation to the sellers, and aggressively start looking for a new mortgage. Make it your number one priority and tell them that they must be able to close the loan quickly. Ask for a time frame. I too am sure that your agent has people who could help on short notice.

Posted by gardensgirl (My Page) on Wed, Feb 28, 07 at 7:22

First of all, how did this broker NOT know your husband was self-employed? She would have had to ask for W-2's from each of you, right? What did you give her? This is a very serious mistake for a broker, she sounds inexperienced. The very 1st questions they ask is about employment and how long you have been at your job. Do you get bonuses, commission, etc.
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Sent her the 1099's and tax returns for 2004 and 2005,right off the bat then sent the 2006 when I got them completed, so she had to know..I am not so sure she is inexperienced I think she has too much going on in her personal life IMHO...but sorry that isn't my problem...
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Posted by triciae (My Page) on Wed, Feb 28, 07 at 8:12

Well, I'm going to be a party-pooper on this one. Sounds, to me, like you were intending to purchase this property with a 97% mortgage plus 3% bond money. Correct? So, no money down on your part? Are you sure you can afford this house? No money down mortgagees have a high default rate

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Yes we can afford this loan, she said the bond was because we are first time home buyers". Hindsight is 20/20..had we known 3 months ago that we would need the downpayment it definetly would not be a problem saving for it...

you can also look into a no doc loan the last rate I heard on them was 6.75

go to your bank or credit union
i have seen stated income loans close in a week

She has really been busy the last few days, guess those phone calls to the top helped....got a 80/20 loan with a good interest rate..at the payment we were expecting...it is in "underwriting" currently, and I have no idea what that is.....will some of you very helpful people give me an idea?
Seller is being sooooo patient, my realtor spoke with the sellers today and everything is fine,,,for now

Loan players are as follows:

Broker: A person that has access to a network of lenders...some private, some banks, some have actual money themselves. They are the "sales people" in the equation usually.

Loan officer: Usually the term for a broker-type, but they work directly at a given lender. Sometimes is used interchangeably with broker.

Processor: The person that works with the broker/LO and the client to get all the necessary paperwork together. Essentially gets everything "packaged" into a folder to present to....

Underwriting: Underwriters are the final go-ahead people on the broker/LO end. They make sure the loan meets all the requirements set forth by the given investor. I.e. if the broker has you plugged into Acme corps "whiz-bang no money down option loan" then the Underwriter makes sure that all the requirements are actually met. If they don't, they return it to the processor to get missing information. If it's a case of you not meeting the requirements at all, then they kick it out permanently. This is called "falling out in underwriting." Even if you fall out then, a broker will try to find other programs that you might qualify for. Generally, the more lenient (the fewer requirements for you to meet), the greater the risk to the lender, so the higher the fees and interest rate.

I have a handful of our closest friends that work in each of these positions and I can tell you that the lines and job descriptions are far from standard. At some places, the processor is just a clerk. At others, processors basically do the processor and underwriter job.

Also, even though an underwriter may underwrite a loan (say "this candidate is good to go for that program) the loan can still fall out with the investor's side for a number of reasons. Obviously if you're dealing with a direct lender, when it meets underwriting, then it's done because they actually lend you the money.

aiki

Hi Fruztr8ted,

REALLY sorry to hear such a truly frustrating experience... I have no defense for the Loan Officer you've dealt with (nor their employers.) They sound both woefully INCOMPETENT... not just in financials, but in how to use technology (HELLO!?!?! Don't know how to open a friggin email attachment??? PEOPLE!!!!)

I hope you've got this ironed out by now... and/or found someone experienced & competent to support you in the process.

The mortgage industry over the last 60 days has basically begun to completely fall off a cliff, turn inside out, and explode, all at the same time. Virtually 90% of what I "knew by heart" regarding allowable guidelines have been wiped off the face of the map... and what will definitely be allowed next week is uncertain... let alone next month, or by summertime.

2007 is going to a long, chaotic year for the financial industries. In uncertainty there IS opportunity... but only to those that know how to find it.

Good luck in your process!

Dave Donhoff
Strategic Equity & Mortgage Planner

PS. I know that was a long rambling response... sorry... just getting back in the saddle here hopefully being helpful.

Dave, can you expand on what you meant by "The mortgage industry over the last 60 days has basically begun to completely fall off a cliff, turn inside out, and explode, all at the same time." please?

Hi ummm,

Sure... check out the headline & the links;

Latest count of major US mortgage lenders that have croaked since late 2006:
36 lenders have now gone kaput

Also see the ailing company list. New: scam alert; consumers beware!

Attention: we are seeking legal and debt remediation services to advertise here. If interested, please contact me at the email at the bottom of this page.

(Last addition: Mar 9, 2007)

Deep Thought Of The Week
~ Bear Stearns analysts upgraded New Century (NEW) one day before the company announced it was breaching covenants with its warehouse lenders, which was also the same day it came to light that NYSE and state criminal probes had been opened against the company for trading irregularities. Bear Stearns is itself heavily involved in mortgage lending at almost all levels. How credible does all this make Bear Stearns, I wonder? ~

http://ml-implode.com/

Dave Donhoff
Strategic Equity & Mortgage Planner

Here is a link that might be useful: Mortgage Lender Implode-O-Meter

Thanks Dave!

Say Dave, (glad to see you back, by the way), I think I already know the answer to this, but I'm going to ask anyway. What happens if I have a loan (that I am keeping in good standing) with one of these companies "goes kaput"?

My guess is that the loan gets sold to another, and presumably more healthy, lender. Is there an agency or someone that brokers it? Would it be in my interest to take matters into my own hands and apply for a re-financing with a lender of my own choosing?

Sorry it has been awhile since I have been here...
this whole thing has gone absolutely nowhere since my last post, I have been up the chain of command and back down sooo many times now...President says..."You cannot do anything, we haven't done anything wrong to you", VP says "oh I thought the branch manager was handling it"...Branch Manager says "I thought the Pres. and V.P. were handling it", Oh by the way the original woman we were working with was "fired", but guess what?!?! She took pieces of alot of peoples files with her..sad thing is, I tried to get the talking heads involved in this WEEKS ago...they do not care at all...I am a southern lady and would never even dream of suing someone but this warrants a looksee by a lawyer...and like I told the President last time I talked to him..My husband is a VETERAN of the U.S. Army and he has worked his butt off all of his life to get jerked around like this?!?!
Why not go VA everyone says? Well we were advised in the beginning that "they are so full of red tape" and "it just takes so long for them to approve it"..
I would be hanging drapes in my new house right now if it had not been for these Unprofessional low-lifes!

So sorry to hear about your problems. If you really want that house you should go find a mortgage elsewhere as others have suggested - your realtor should know someone. While you will probably have to go through the whole process again, at least you already have the necessary paperwork at the ready. Ask your realtor if the sellers would agree to a contract with a first right of refusal contingency something that would allow them to put the house back on the market while you try to get your closing stuff together.

Don't panic I used to do closings in my previous life as an attorney and we moved closing dates a lot due to lender problems and gosh knows what else. It was a rare bird that everything came together on time, especially at the end of a month!

I think the whole brooha about VA and FHA loans is very dependent on where you live. If you live in a town where there is a military base, the mortgage companies and banks and all the various folks who work your loan are going to be familiar with those loan programs.

From personal experience, we bought our first house VA and it was a breeze - our second (was VA) and the third and my fourth house were FHA. The first conventional loan I ever got was the present house. In all cases, the same inspections were required, the same things the sellers and builders were required to do on the government loans. The difference was in the money down, the max amount of the loan, and who paid for what in some closing costs. Again, all very dependent on where you live and what your mortgage lenders are used to working with. Your mileage may vary.

Hi mfbenson,

What happens if I have a loan (that I am keeping in good standing) with one of these companies "goes kaput"? My guess is that the loan gets sold to another, and presumably more healthy, lender.

That's right.

Is there an agency or someone that brokers it?

Yes, there is a small industry of brokers that handle servicing firms and portfolios.

Would it be in my interest to take matters into my own hands and apply for a re-financing with a lender of my own choosing?

Not usually, UNLESS you have experienced particularly painful servicing issues. The terms of your financing stays put regardless of who ends up with the business.

Luck!
Dave Donhoff
Strategic Equity & Mortgage Planner