Financing in Lansdale>Question Details

meg sco, Home Buyer in Lansdale, PA

Applying for Mortgage with Impending Maternity Leave

Asked by meg sco, Lansdale, PA Mon Oct 14, 2013

I need to get approved for a mortgage that will close shortly after I go on maternity leave. The leave will be partially paid, and partial short term disability. All lenders I've called have told me that I need to be back at work to qualify for the loan, but according to HUD and what I've read that is not the case. Does anyone know who I could call to discuss? I will more than qualify for the loan based on my salary, and adjusted income during leave.

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6
Meghan,

After doing some research I can do this deal. Give me a call at 267 992 7276

Here are one of my lenders guidelines regarding maternity leave:

Temporary Leave — Employment Requirements
The borrower's employment and income history must meet standard eligibility requirements as described in Section B3-3.1, Employment and Other Sources of Income.
The borrower must provide written confirmation of his or her intent to return to work and the agreed upon date of return as evidenced by documentation provided by the employer.

The lender must receive no evidence or information from the borrower's employer indicating that the borrower does not have the right to return to work after the leave period.
The lender must obtain a verbal verification of employment in accordance with

B3-3.1-07, Verbal Verification of Employment. If the employer confirms the borrower is currently on temporary leave, the lender must consider the borrower employed.

The lender must verify the borrower's income in accordance with Section B3-3.1, Employment and Other Sources of Income. The lender must obtain
• the amount and duration of the borrower's “temporary leave income,” which may require multiple documents or sources depending on the type and duration of the leave period; and
• the amount of the “regular employment income” the borrower received prior to the temporary leave. Regular employment income includes, but is not limited to, the income the borrower receives from employment on a regular basis that is eligible for qualifying purposes (for example, base pay, commissions, and bonus).
Note: Income verification may be provided by the borrower, by the borrower's employer, or by a third-party employment verification vendor.

Requirements for Calculating Income Used for Qualifying
If the borrower will return to work as of the first mortgage payment date, the lender can consider the borrower's regular employment income in qualifying.
If the borrower will not return to work as of the first mortgage payment date, the lender must use the lesser of the borrower's temporary leave income (if any) or regular employment income. If the borrower's temporary leave income is less than his or her regular employment income, the lender may supplement the temporary leave income with available liquid financial reserves (see B3-4.1-01, Minimum Reserve Requirements). Following are instructions on how to calculate the “supplemental income”:
Supplemental income amount = available liquid reserves divided by the number of months of supplemental income
• Available liquid reserves: subtract any funds needed to complete the transaction (down payment, closing costs, other required debt payoff, escrows, and minimum required reserves) from the total verified liquid asset amount.


Number of months of supplemental income: the number of months from the first mortgage payment date to the date the borrower will begin receiving his or her regular employment income, rounded up to the next whole number.
After determining the supplemental income, the lender must calculate the total qualifying income.

Total qualifying income = supplemental income plus the temporary leave income
The total qualifying income that results may not exceed the borrower's regular employment income.
Example
Regular income amount: $6,000 per month Temporary leave income: $2,000 per month Total verified liquid assets: $30,000

Funds needed to complete the transaction: $18,000

Available liquid reserves: $12,000

First payment date: July 1
Date borrower will begin receiving regular employment income: November 1
Supplemental income: $12,000/4 = $3,000
Total qualifying income: $3,000 + $2,000 = $5,000


Regards,
Alan Openshaw
Cornerstone Lending Inc
Southampton Pa 18966
215 953 0800
cell 267 992 7276
VOTED BEST IN BUCKS 2010 & 2012
NMLS ID 143960
0 votes Thank Flag Link Wed Oct 16, 2013
Meghan,

I can help you with your finaning. Please email me at tony.garcia@primelending.com to discuss.
0 votes Thank Flag Link Mon Oct 14, 2013
Hello Meghan,

Short terms disability income cannot be counted as income to qualify for a mortgage as by it's very nature it is not stable income. I have had several similar situations and typically the lender wants to see you back to work and getting a paycheck. It's not that the mortgage lender that is lying to you. That is the norm. There are lots of things that HUD says are possible but never put into practice.
HUD allows credit scores down to 500....never done one....and doubt I ever will
HUD allows people foreclosed on less than 3 years to get a mortgage, but I can't find a lender doing it.

If you qualify based on your partially paid leave I MAY have a lender that will include that income although I cannot guarantee it. With more information at least I can give you an answer. How long will you be paid whilst on maternity leave, what is the nature of your job? How long have you worked there?
If you would like to provide me with more information I can check with some of my underwriters in the morning.

Regards,
Alan Openshaw
Cornerstone Lending Inc
Southampton Pa 18966
215 953 0800
cell 267 992 7276
VOTED BEST IN BUCKS 2010 & 2012
NMLS ID 143960
0 votes Thank Flag Link Mon Oct 14, 2013
Meghan,
HUD doesn’t care what type of income you have or the source, it is the stability that is causing the problem. Stability by their definition means it will continue for at least 3 years. So if the lenders you have approached cannot prove it will continue for at least that long they probably are not allowed to use it in calculating your income to debt ratios.

The obvious solution would be to close before taking leave, good luck, and congratulations on the new arrival.

Jim Simms
NMLS # 6395
JSimms@cmcloans.com
Financing Kentucky One Home at a Time
I answer questions about financing real estate based on my decades of experience dealing with mortgage underwriters. This answer is my personal opinion, has not been reviewed or approved by the company I work for. I do not offer legal or tax advice, if you need answers from an attorney or CPA find one knowledgeable in your local market.
Web Reference: http://jamessimms.com/
0 votes Thank Flag Link Mon Oct 14, 2013
Most lenders have overlays, which would be additional underwriting criteria that is stricter than the government entities. This is likely what you are running into with your situation.
0 votes Thank Flag Link Mon Oct 14, 2013
Hello Meghan,

I am not sure why lenders would provide you with false information. I do know that every lender is different and what one does, another might not. I am not a fan of many mortgage lenders to be honest. I recently had a transaction that was a complete nightmare and it was all due to the mortgage broker.

I always tell my clients to find a reputable, trustworthy lender. That can be very hard to do because most people have no clue what the lender is saying.

I have been dealing with the same lender for many years now because a trusting relationship was built over the years. The lender did what they said they could do and didn't lie about anything. Every agent will have his or her own lender or lenders that they deal with. In the transaction that I just dealt with, the buyer agent did a deal with this particular lender every single month but it didn't mean that the lender was good or trustworthy. I did a search of this particular lender and found out that they had been sued over and over and had went from company to company.

I do have someone who I would trust with my own mother and father and would be happy to provide you with his information. If you would like it, feel free to email me at reneeporsia@mac.com or contact me at 215.669.0589.

I would also be very happy to discuss your future goals and answer any questions you may have.

Renée Porsia
Consultant/Associate Broker
RE/MAX Action
215.669.0589 Direct
215.358.1100 Ask for Renée

http://www.reneeporsia.com
Proudly servicing Philadelphia, Bucks & Montgomery Counties full-time for over 13 years.
0 votes Thank Flag Link Mon Oct 14, 2013
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