I am buying a house in the U.S. while renting / working in the U.K. I am a first time buyer who intends to visit this property as often as possible (from the U.K. several weekends or more a year) and I have immediate family living nearby who will be visiting the property at least weekly (and staying there often). I do not own any property and as such am told that a primary residence mortgage is OK by my lender. Does this make sense to you? I am putting over 20% down, have a high credit score, high income, and no debts if that helps. Thank you in advance for your advice.

Here is some basic information:

Assisting an Elderly Parent
Elderly parent must have insufficient income to qualify for a mortgage or be unable to work.
The individuals qualify for the loan. The parents can be on the mortgage although it is not required.
There are no distance requirements between the elderly parent and the individuals (their child).

You are correct, the underwriter wants the truth. I am going to write a post (maybe a couple) about your scenario. It’s the loan officers job to take a complete loan application and then typically it’s submitted to “automated underwriting” which will produce findings. These findings will dictate what will be called for to support the loan approval. Some times, the findings won’t call for documentation to support income and other times, it will want 2 years complete tax returns. It all depends on what was entered into the computer as far as what the computer will spit out.

With regards to your home based business…a few thoughts come to mind.

1. It’s possible that your LO does not know how to read a tax return and probably thrived during the subprime markets with stated income. Now that these loans are gone (or very expensive), they don’t know how to exist with “a paper” underwriting.
2. If your tax returns show a net loss over the past two years or even during the last year, it would need to be factored into your income. See comment 23.

Declaring your revenue from your home based business as a gift and having someone sign a gift letter stating so is fraud. Is the LO creating (signing) the letter for you? The LO should have known by looking at your bank statements at application that you would need to address large deposits (if they were on your original statements).

Regarding your rate. It sounds like your rate may not have been locked. If your rate was good for one month, they did not lock for a long enough period–your rate should not have gone up, there should have been an extension fee instead. With a copy of your purchase and sale agreement, the LO should have known how long your lock period would need to be and should have priced the loan accordingly. This is why consumers should not shop by rate. You may not get what you were promised by a bait and switch lender like Lending Tree–where the “quoted rate” is everything.

If your LO did not lock you, they’re scrambling like crazy right now because as you mentioned (and can see by my Friday rate posts) rates have been going up. Did the LO provide you a written Lock Confirmation?

85 day closing? 30 day is typical as long as the transaction is “normal”.

Trust your instincts…you’ve pointed out a ton of issues with the LO. I’m sorry this has gone sideways on you.

The mortgage industry will recover and desparately needed this correction. The Bad Apple-LO’s who got in for a quick buck and are still remaining won’t last long with the tightening guidelines…there’s simply too much too learn and stay on top of…it’s not easy money anymore. Consumers need to learn to select the person who is handling their mortgage needs by their qualities and experience–a fair rate will naturally follow.

This is not the first Lending Tree night-mare I’ve heard of and I’m sure it won’t be the last.

I agree with your statement above. The LO probably did not want to disclose our home based business.

The loan processor told my husband that the documentation that we sent “opened a can of worms”. Apart from that I noticed the loan processor dont even READ what is in the document. The LO was like doing a rush job, prefering to have a shortcut documentation which will fly in the eyes of the UW.

Loan application should be based on quality. All I know is UW wants the truth. My letter to the LO stated that the business started only this year. Incomes are commissions only and its not on a regular basis. If she only read it, it should suffice.

After all the headaches I got from the loan processor, it prompted me to contact an underwriter. I got a different opinion from the underwriter. My opinion and the underwriter’s opinion were almost the same.

As a law student, I would ask the same question to myself, why would an income which is taxable, be declared as a gift ?… when it should be declared as a “second income”? To have it declared as a gift is plain FRAUD ?

I did dispute the gift letter and I insisted that our application should be assessed based on our W2s. When the basis of approval is from W2s and income tax return, it should not question a documented cash flow from a second income.

Here’s some info of the transaction from the start…..

The first few weeks I had with this broker, I had a locked up interest rate of 5.5. Later it increased to 6.5 and they reasoned that the locked up rate was only good for one month.

The next action the LO did was trying our prospective house no. 2 to be declared as an investment. And tried to convince me that its an HUD backup loan whatever. Honestly I laughed at myself. Did the LO really think that a customer is this stupid? This whole scenario took another 2 weeks of delay on the LO part.

Next, we were asked to have a gift letter. As I mentioned I disputed it as I believe what my intuition tells me that the LO is inviting trouble.
Another 1 week delay on the part of the LO.

LO finally forward all the paperworks to the UW. UW approved all.

Next action from the LO, informed us that the loan documentation was already forwarded to the title company (Wednesday).

MOnday came we heard nothing from the title company. We contacted the title company, it turns out that LO forwarded it Friday evening.

We were scheduled to sign all the papers. Id really thought we could get the house after both parties signed the agreement.

Next action from the LO, she was silent and did not inform us that there is another issue that needed to be done. LO wanted a contractor to change the painting inside the house becuase it may be or was a lead based paint. Then LO will arrange an appraiser to come and check the house painting. Who will pay for this appraiser? Would the appraiser scheduled to check immediately or would it take another week to complete the paperwork.

Now my questions are why did the LO lied to us that all is good? Why did the LO waited for another 2 weeks and then raise another issue after both parties signed the agreement.

To me, this LO we are dealing with is a compulsive liar. We do understand that we want the house but we also do understand what’s HUD’s regulation. We nevertheless do understand that if we want to deal with this broker, they have to give us quality customer care.

Then July 1, the tenant for our house no. 1 is expected to move as per the lease agreement. But with the remaining paint issue that needed to be resolved, it could take another week. Therefore, tenant for house no 1 wont be able to move as agreed. Tenant would definitely mad at us and possibly walk away from the lease agreement.

Am trying to guess what is the next move of the LO. SAssuming LO would get back to us first week of July, LO would then ask us to forward an updated lease agreement on our house no. 1, as by this time she believe that there was an issue with the tenant. LO then would ask a check copy paid by the tenant to us.

Counting all the delays made by the LO to close the escrow would be close 85 days. Our prospective house no. 2 is not a short sale nor a foreclosure. Would it really take 85 days to close the escrow?

Therefore, there is something wrong with the LO. And I could only think of one thing, the interest rate has gone up recently. Its highest in 9 months. This delay tactic by the LO were all calculated so mortgage brooker could get more profit from us.

My next guess is, this LO would raise our interest rate and then reason to us that the deadline for our 6.5 rate was over and the new rate should be used, possibly 7.5 or 8.

OUr conclusion is we’d rather forgo the loan. We will ask them to refund all expenses paid for appraisal, home inspection and earnest money.

Then we will take legal action.

Hopefully Rhonda you will understand this whole saga. Now I understand why the mortgage industry is sinking and will be sinking for many years to come.

As per my statement on June 18, our qualifying income is based solely on our W2 (or full time job) declared income.

Homebased business income are declared on 1099.

Thanks for visiting RCG and asking your questions–it just may help other RCG readers.