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Old 10-30-2010, 02:59 PM   #21
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Was that recent? I am in the process of a refi with MetLife, and they had no problem with it. Weird.
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Old 10-30-2010, 03:02 PM   #22
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Your points are well taken but.......

Given that the rules need to apply to everyone without exception, I don't really see anything unreasonable in their requests. And I'd rather see my bank err to the conservative side than the liberal. It seems like we just finished a period fraught with issues regarding loaning money to poor risks.

The procedures for determining and documenting the borrower's financial status and ability to pay need to be the same for all regardless of whether he/she plays golf with the bank pres, attends the same church, is one race or gender or another...... etc. Therefore the bank's procedures need to be adequate to weed out the lowest common denominator, even if they offend someone of your status by seeming to be "unreasonable" or intrusive.
As I mentioned in my first post, I agree that we were not well served by a banking industry that loaned to anyone with a pulse; NINJA loans should never have existed. But I still maintain that when 1) the collateral is demonstrably worth at least 5 times the loan balance and 2) the credit check and pay stubs establish that our debt service to income ratio is less than 5%, that should be sufficient. Particularly given the fact that we have been making mortgage payments to this very bank on time or early for the last 18 years, and the fact that the payments under the new loan are substantially less, at some point an individual at the bank should be able to exercise some reason and say "You know, it is almost certain this loan will perform and we're well covered if it doesn't. Why bother with tax returns?"

In my view, the current paranoid approach and the former laissez-faire approach are two sides to the same coin. No one is exercising any judgment as to the actual risk that is being undertaken by the bank; they are simply mechanically applying rules (or, in the past, not applying them). Neither approach serves our economy well.
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Old 10-30-2010, 03:05 PM   #23
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I found it odd to question $30k in self employment, when I put down more than 30% of the loan, $183k, to help secure the finances. If anything, why question such a small amount of this loan?
I bet they were just following a procedure that called for questioning all income stated on anyone's application. If they didn't based on the fact you would have qualified even without that income, they're tacitly accepting it.

These days lending institutions are under much (deserved) scrutiny. They have procedures in place which, if followed to the letter, will allow them to pass muster if audited. I don't think you're going to see a lot of shortcuts based on "common sense" but which skip or alter the documented procedures, at least until the heat from the gov't lets up.
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Old 10-30-2010, 03:14 PM   #24
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In my view, the current paranoid approach and the former laissez-faire approach are two sides to the same coin. No one is exercising any judgment as to the actual risk that is being undertaken by the bank; they are simply mechanically applying rules (or, in the past, not applying them). Neither approach serves our economy well.
I suppose this is the basis of our disagreement on this. I think the lending institutions need documented, tough lending standards, compliant with current legal mandates, where claims are backed by evidence. I'm less open to "exercising.....judgment." I think it's a slippery slope which leads to variation in standards, discrimination based on non-financial issues such as race, gender, social status, friendships, etc., and that it's worth the inconvenience of providing extensive backup to prove our situations.

But I understand fully that there are other points of view and respect those even though I disagree with them. I'm glad you got your refinancing done OK despite the inconvenience.
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Old 10-30-2010, 03:24 PM   #25
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I'm less open to "exercising.....judgment." I think it's a slippery slope which leads to variation in standards, discrimination based on non-financial issues such as race, gender, social status, friendships, etc., and that it's worth the inconvenience of providing extensive backup to prove our situations.
I see your point on this. It certainly helps prevent discrimination on non-financial bases to have documentation requirements set in stone. But you surely would expect a bank to discriminate on the basis of financial issues, and legitimately so -- that's a loan officer's job. I guess I'm just hoping for some happy medium, where intelligence makes an occasionally foray into the process.

In the grand scheme of life, this was merely a trifling annoyance for me, but I could see it presenting a real problem for some people.
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Old 10-30-2010, 03:46 PM   #26
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When I applied for a re-fi at PenFed they wouldn't accept the printout of an online statement.
Shocking. When I refied with them last year they took everything as a pdf.
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Old 10-30-2010, 03:56 PM   #27
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When I applied for a re-fi at PenFed they wouldn't accept the printout of an online statement.
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Shocking. When I refied with them last year they took everything as a pdf.
I'm two weeks into a PenFed refi and they've had our 16 PDFs for about a week now. Some of the PDFs are document scans and some are copied right off Fidelity's website. PenFed didn't immediately reject them and, while I haven't heard any response at all, I suspect that they're OK with it. I guess I'll know more next week when I start pinging PenFed and our title company about the appraisal.

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Originally Posted by Gumby View Post
... at some point an individual at the bank should be able to exercise some reason and say "You know, it is almost certain this loan will perform and we're well covered if it doesn't. Why bother with tax returns?"
In my view, the current paranoid approach and the former laissez-faire approach are two sides to the same coin. No one is exercising any judgment as to the actual risk that is being undertaken by the bank; they are simply mechanically applying rules (or, in the past, not applying them). Neither approach serves our economy well.
I suspect that judgment & discretion went out the window when the lenders stopped holding the loans in favor of FHA's securitizing guidelines.

My impression is that FHA didn't necessarily dictate the process as much as they said "Lenders will conform to the following criteria" and then abdicated the enforcement to the FDIC and the lender's "best practices"... which as we all know has a tendency to redirect all flow through the largest loopholes.
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Old 10-30-2010, 04:06 PM   #28
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I think the mistake we make is thinking that a loan processor has discretion on loan documentation. I thought our refi process was well underway, but just last week talked to them and they needed more “income verification” information, so had to scan some more items for them to add to the mix. The refi application moves through the system step by step and I guess each person is responsible for their part and the standards are different than they used to be. They can’t tell by our application that we have only the best intentions and will likely pay back our loan.
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Old 10-30-2010, 04:36 PM   #29
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The documentation requirements that the OP is describing is pretty normal in my experience here in Canada, where lending institutions have always been cautious.
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Old 10-30-2010, 05:02 PM   #30
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My refi with PenFed was 2-3 years ago. Since that time many financial institutions (including PenFed) is sending PDFs by e-mail to escape the cost of postage. PenFed's mortgage operation may have changed their expectations. At that time PenFed wanted copies to include all the pro-forma verbage at the end of the statement. What a waste of paper.
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Old 10-30-2010, 05:14 PM   #31
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My refi with PenFed was 2-3 years ago. Since that time many financial institutions (including PenFed) is sending PDFs by e-mail to escape the cost of postage. PenFed's mortgage operation may have changed their expectations. At that time PenFed wanted copies to include all the pro-forma verbage at the end of the statement. What a waste of paper.
They have actually been sticklers as far as lending goes for a long time, so that does not surprise me. When refi'd about a year ago, I was amazed at how much documentation they wanted for a mortgagethat was a slam dunk, credit wise. OTOH, I was also amazed at how much easier it was to submit said docs, mostly as emailed pdfs.
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