When I read LinkedIn from time to time, I have seen some funny memes on why people’s loans have died during the underwriting process. You know the culprits such as buying a new car, taking a cash advance on a credit card, and getting a new job! I agree with mortgage sales leaders that teach their followers about preparing your client to experience the mortgage process with as few issues as possible buy NOT doing the list above. Their suggestions include giving a friendly welcome email that has the reminders built into the message that informs them not to become a victim of “squashing” their mortgage!
But what if your borrower is changing jobs? Does this mean they can’t get a mortgage for months or years? If you have been following my blog you know that my first response is it depends on what is changing and why.
Along that line of thinking, Fannie Mae has put out some new guidance about employment offers and employment contracts that will make this one squash-factor a bit easier. Fannie Mae offers two versions. If you are not a seller to FNMA only option two will be something that may be accessible to you. This commentary comes from FNMA B3-3.1-09 Other Sources Of Income (10/02/2019 version) employment offers
Option 1: Paystubs obtained before loan delivery to Fannie Mae
- Must have a copy of the executed employment offer retained in the file
- Must obtain the first paystub which supports the income used to qualify
To summarize what Option One will do is allow a selling lender to set an internal policy to give them to create a unique niche, thus creating a possible market advantage. Fannie is stating as long as when you give us the loan the income that you have on your approval before closing and supporting the contract is accurate, FNMA will buy it. This gives the lender flexibility to state if that job should be started 30, 60, or 90 days out from closing based on secondary market costs to hold selling the loan for longer periods.
Option 2: Paystubs not obtained before delivery to Fannie Mae
- Purchase of principal residence one unit only
- Not employed by family, and only fixed base income
- The start date must not be any more than 30 days prior to note date OR 90 days after note date
- Additional reserves are required
The new updates offered by Fannie Mae show a clear path on what is expected from sellers and where they can push the boundaries. I think this is a great move and gives qualified borrowers that just have bad timing for a job change a chance to buy a home. The main target audience will be people relocating and those who got a big promotion that may need to move to accept the new position.
Want to make sure you and your origination team (LOA’s, LO’s, Processors, Underwriters) are keeping up on the guidelines so you don’t lose a single loan to missed information? I can help! I took my experience and the experience of other qualified long term underwriters and built the “Field Guide To Underwriting “ courses (You can check them out here at www.uwfieldguide.com). It is an online learning portal with over 35 videos on underwriting topics. With the course, you get access to the monthly webinars that go over the latest changes, a teaching topic, and Q&A sessions to bring your toughest issue to the table for help.
Reach out to me at firstname.lastname@example.org if you need help getting your loans down to three touches or less, and origination to clear to close in fourteen days or less! I can go over a custom made solution to reach that next level of origination excellence and customer service satisfaction for internal and external clients!