New Rules Have Lenders Checking Credit Reports the Day of Closing

As of June 1, mortgage lenders began re-pulling credit reports of borrowers just before a loan closes. Lenders are looking to make sure the applicant has not incurred any new debt prior to closing the loan. The change in procedure is part of Fannie Mae's Loan Quality Initiative (LQI). The LQI encompasses many aspects of mortgage underwriting. Basically, FHA as well as Fannie and Freddie are making an all out effort to improve their loan quality for mortgage backed securities.
Why check credit? When someone buys a home, they also find themselves in the market for a new refrigerator, washer/dryer,  furniture ,ect. .                                                                                                                     Search Homes
  
Sometimes these purchases are financed with credit cards. When this happens the balance of the applicants credit card rises which will change their monthly payment and possibly their credit score. The already approved loan will have to go back to the underwriter to make sure they still qualify with the higher debt. Sometimes purchases for furniture and appliances are financed with a store credit card, or "12 months same-as-cash." These are still debts that show up on a credit report and may impact qualifying.
None of us want to find out the day of closing that a previously approved applicant no longer qualifies because they went on a shopping spree. Please advise your homebuyers that they should not be making any purchases with credit or acquiring any debt before their mortgage closes.
Dan Shaw,  People's Mortgage Company

if you are looking for that 2nd home call Linda Wieczorek AZhomes4u@gmail.com

Can I Purchase A Home If My Spouse Does A Short Sale?

Via David Krushinsky (Mortgage Professional - Phoenix, AZ - NMLS 202115):

Short sales, in most cases, are one of the most economical solutions for all parties involved when a borrower can no longer afford their home.  The bank typically incurs a smaller financial loss than would result from an ultimate foreclosure or continued delinquency on the mortgage payments.  Borrowers may be able to soften the overall damage to their credit, and potentially settle future deficiency judgments. The big question on hand is.......What is life like after a short sale?? 
If you're married and your spouse has recently had a short sale, you may still be able to purchase a home. 
For the majority of married couples, their homes are purchased together using joint credit, income and assets. This article will address the following situations; the spouse purchased a home before the couple was married in his/her name, or the spouse purchased a home, qualified on his/her own qualifications and the other spouse disclaimed their interest in the property.
Let's take a look at an example of what a typical scenario might look like for a typical borrower.
Mr. Smith bought a home in 2002.  He was forced to do a short sale in 2008 because he lost his job and could only find employment that paid 50 percent of his previous income. When Mr. Smith purchased his home, he was able to qualify on his own and Mrs. Smith was not included on the loan.  Mrs. Smith signed a disclaimer deed at the closing.  Mrs. Smith has since graduated from medical school and returned to the workforce.  Mr. Smith and Mrs. Smith would like to purchase a new home together. Unfortunately, Mr. Smith's credit will not allow him to be part of the loan due to the short sale.  Even if Mr. Smith's credit score has rebounded from the effects of the short sale, Mr. Smith still must wait 2-3 years before he can buy using most traditional financing.
Mrs. Smith can qualify for a home on her own even though Mr. Smith had a short sale less than 2 years ago, provided she meets the standard qualification standards.  Mrs. Smith would like to purchase the home with a FHA loan.  In community property states, such as Arizona, Mrs. Smith can still purchase the home even though the lender will review Mr. Smith's credit history.  However, any additional debts which appear on Mr. Smith's credit report will have to be included in her qualifying ratios.  As long as she can qualify on her income alone, she will be able to purchase a home.  Mr. Smith will have to sign a disclaimer deed, relinquishing all of his rights to the property.
Please note: This article was written per Arizona State laws and other states may differ.  Please consult your mortgage consultant to discuss the laws and regulations applicable to your state.

 

Foreclosure prevention - Foreclosure Resources for Homeowners

Arizona Attorney General Terry Goddard cautions homeowners about foreclosure prevention scams and encourages those facing foreclosure to consult with free housing counseling services.