Just how fine-toothed are lenders' combs?

Asked by Elizabeth, Washington, DC Thu Nov 15, 2007

I am hopefully just paranoid because my father-in-law is a real-estate attorney, and he's been telling us horror stories... but I have a somewhat funny situation in that my husband and I are relocating, and we are going to continue performing work for the same firm (we work together), but are going to be switching from salaried work to contracted work on a project-by-project basis. The lender, of course, wants a relocation letter from my company, and I am trying to figure out how much information is too much (or too little). I don't want an employment-verification call to nullify the whole deal at the last minute (because, "oh, we were assuming you were going to continue on salary"), but I am worried full disclosure of our situation makes us unsavory to the lender altogether? Our employer is completely supportive and will write and sign a letter with whatever sort of content we need... and we both have great credit... so how to hedge our bets? Thank you in advance!!!

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Infinity Rea…, , Saratoga, CA
Thu Nov 15, 2007
I dont think it is so much loan fraud as it is more about what the lender is asking for. If they are looking for a reason of relocation, that has nothing to do with wether your salaried or on a contract basis. If you give the lender what he is asking for then in no way are you commiting fraud. If they asked you about whether your salary or not then you lied, well then that might be a different story. But there are many variables to asnswer this question, they might be asking why your relocating more due to owner occupency issues rather than incom issues, this is mostly the case with lenders. You might be just a bit paranoid.
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Elizabeth, Home Buyer, Washington, DC
Thu Nov 15, 2007
Thanks, everyone - and just to clarify, I wasn't looking for green lights to mislead or even lie (21 YEARS of Catholic education wouldn't allow that), but just guidance on how best to present our situation to the lender. I think including "why" we are moving while continuing to work for the company in the relocation letter is an intelligent-sounding idea that we might have otherwise overlooked.
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Mike Kelly A…, Agent, Santa Rosa, CA
Thu Nov 15, 2007
This is the kind of "selective" lending which got us into this mess to begin with. I have a friend at CountryWide and he was approached by a Realtor he had worked with previously and waned approval on a very shaky buyer. She threatened if you don't get this approved then you can forget about me for any future business. He told her she would be missed and sent her away. She got the loan approved by a mortgage broker. Your question is riddled with loan fraud and your employee is aiding and abetting. Talk to your Dad!
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Greg Kiely, Agent, Newton, MA
Thu Nov 15, 2007

The magic number here will be how much money you are claiming you will be putting down at the time of purchase. If you are requesting an 80% loan (20% down) you will find that the comb is missing quite a few teeth. If you are requesting two loans or are stretching the limits of your debt to income ratios then you will find the comb gets very fine.
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