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How to find out reason refi refusal
Old 12-03-2010, 09:55 AM   #1
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How to find out reason refi refusal

I am 60 and retired. I tried to refi and was turned down. The reason the credit union gave was the Fannie and/or Freddie refused because we use part of the property for farming. That use is we rent 20 acres to farmer for $1200 a year. This is a farming area. I have no debt other than the mortgage and from all the charts I'm well in income to debt ratio for the mortgage. Is there a way to find out if this is the reason? What would the justification be if true?
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Old 12-03-2010, 10:18 AM   #2
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Why would you think they would lie about the refusal


I would think that the refusal is based on part of the property is being used for 'business'... they are not in the market to make business loans...


You might want to see if you can get a private mortgage... not one of the gvmt entities...
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Old 12-03-2010, 10:25 AM   #3
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I don't view Rent of $1200 as a business. If it disappeared do they think I could not afford the loan?
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Old 12-03-2010, 10:41 AM   #4
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glinka, Fannie and Freddie are tightening the screws on what they will accept and in many cases the changes they make don't seem to make a whole lot of sense. Look for other options.

You say you rent part of the property for farming. How about looking into USDA mortgages? I would think they would have no problem with your land rental. Barring that, find a local bank that is willing to hold the loan on their books rather than sell it off to the GSEs.
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Old 12-03-2010, 05:56 PM   #5
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glinka, Fannie and Freddie are tightening the screws on what they will accept and in many cases the changes they make don't seem to make a whole lot of sense. Look for other options.
I just finished a refi on a duplex and auditor came back and wanted detailed K-1info on a line entry on our 2009 tax return that showed shares in a publically traded partnership. Apparently banks are now required to have detailed disclosure on all "partnerships" with interest of 25% or more. Of course, our share had many zeros to the right of the decimal. Since I since sold the shares, we avoided the hassle by signing a statement declaring that interest was sold. The economic value had absolutely ZIP to do with loan quality.
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Old 12-04-2010, 03:09 PM   #6
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I don't view Rent of $1200 as a business. If it disappeared do they think I could not afford the loan?
You missed my point... it is not that they are concerned that you can or can not pay.... but that you are not using the property as a 'home' primary residence... just checking the box that you receive rental income or that you are farming is probably enough to get it denied...
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Old 12-04-2010, 04:07 PM   #7
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Checked with my present banker, she says they are refusing for all kinds of things now. Just hard to figure that any income would be a detriment to my ability to pay. Ignor the rent, income is still waty over what is needed. I don't know any farmer who doesn't farm his own land. Does that mean Freddie doesn't loan to farmers?
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Old 12-04-2010, 04:08 PM   #8
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Checked with my present banker, she says they are refusing for all kinds of things now. Just hard to figure that any income would be a detriment to my ability to pay. Ignor the rent, income is still waty over what is needed. I don't know any farmer who doesn't farm his own land. Does that mean Freddie doesn't loan to farmers?
I repeat: look into a USDA loan. They make mortgages left and right on fairly generous terms.
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Old 12-05-2010, 08:16 AM   #9
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Here is information on "Farmer Mac": Farmer Mac - Borrowers - Finding the Right Loan

Like Fannie Mae, it doesn't make direct loans, but works through lenders to finance rural and farm properties, which may or may not involve a USDA guaranty.

You need to pigeon hole yourself into the right kind of lender.
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