I have been working on a deal for around a month and a half. The deal was a very difficult one to get through. The borrower has mid 700 scores and was fully qualified to make the purchase. I ran into issues on the appraisal. The property was in pretty poor condition; It is a foreclosure that Citi-Bank was selling. The intention of my borrower was to make the purchase then make the neccesary renovations and either flip or rent the property. He was undecided on whether to flip or rent the property but he was dead set on obtaining the property and doing much of the work him self (he is a handy man). It wasn't easy but I was able to get the appraisal issues cleared through underwriting. Today I called my borrower to get the remaining "stips" (conditions on approval). One of the conditions that needed to be met prior to closing was one more recent paystub dated within 30 days of closing. I had his initial income documentation but it is not uncommon for underwriting to need one more recent paystub. When I called him this morning to gather the remaining stipulations the first thing that I told him I will need is a recent paystub. He then informed me that it will be hard for him to produce that because he was laid off a month ago and that he is now recieving unemployment. Now even if I could use unemployment for income qualification purposes (which I cannot) the income from unemployment is a fraction of what he was earning. Now at the very begining of this process I told him that I may need an additional paystub when we get close to closing. He was ok with this at the time. Also the entire time that I have been working with him he has been making references about his work and eluding to the fact that he "missed my call" because he was "at work". He always called me back promptly, but today is the first I am hearing about him being liad off.
He was avoiding the issue just hoping that everything would go through. I worked very hard for the last month getting these very difficult conditions cleared in order to close this loan. Now we are at the finish line and I am finding out that my borrower has not been completely forthcoming with me. I understand that he probably was hoping that it would not come up but something that everyone should understand is that everything is completely verified prior to closing.
We don't just lend 100's of 1000's of dollars to people without first verifying the conditions on the approval. If something comes up that changes your qualifications during the loan process always notify your lender right away. It may be something that is going to kill the deal or it may be something that your lender has a solution for. Either way your lender needs to know and if it is something that is going to kill the deal you will have saved time and potentially some money.
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