Middletown, CT

Thursday I began this series "Questions That Must Be Asked ............ Declarations Section VII Of Loan Application" which is a follow up to a blog I did on Tuesday about the need for Buyers to be Pre-Approved for a loan "Mortgage/Loan Programs with Low or No Downpayment Still Available In Connecticut ..... Pre-Appoval Letter", and the process that should be followed. In Pre-Approving a Buyer it is EXTREMELY IMPORTANT that the Loan Officer not just look at Credit and Income, or even collect documentation to verify the information that they were given, they have to complete a full Loan Application (1003). Without completing a FULL APPLICATION, mistakes are very likely to happen, because each page of the 1003 has questions if not answered can create surprises and huge problems later on.

As I stated Thursday one of the pages of the Loan Application (1003) that unfortunately does not get the full attention that it deserves, and taken for granted by many Loan Officers, is the Declarations Section VII of Page #4. Each question on the Declarations Section VII Of Loan Application only requires a YES or NO answer, and maybe that is why it does not seem to be given the same level of attention as other parts of the Loan Application.

Yesterday I covered the first 2 question on Declarations Section VII Of Loan Application, and today I will cover the next 2 questions, and continue to explain why these Questions Must Be Asked On The Declarations Section VII Of Loan Application and there importance. The third question on Declarations Section VII Of Loan Application states:

• c. Have you had property foreclosed upon or title or deed in lieu thereof in the last 7 years?

This question may seem easy to answer at first, but it is not as simple as it may appear. The reason why it is not as easy as it appears is because many people who are foreclosed on consider not owning the house from the point that they were evicted from the house. This eviction can place many times when the bank holds a Foreclosure Auction, but this not the date of the foreclosure, so technically the owners still own the house. In fact they are considered the owners of the house up until the bank completes the foreclosure process which could be several months later. Even the date on the "Foreclosure By Sale Committee Deed" is not the date of the foreclosure. This date is just the date that the Foreclosure Committee (usually a committee of one) approved the foreclosure, but it is not the final date of the foreclosure. That date could be 3 to 6 months later, and it is at that point that the owners of the house have been foreclosed on and no longer own the house.

So as you can see a question that seems easy to answer is not so easy after all. Because of the confusion that this process can create, it is important to fully investigate all foreclosures if the Borrower answers YES to this question.

FHA requires three years from the time of the foreclosure before a Borrower can qualify for an FHA Loan again, and Conventional (Fannie Mae & Freddie Mac) requires five years. If a Borrower honestly believes that three years have past since they were foreclosed on, because that was when they were evicted form their house, and foreclosure documents are not requested in the beginning of the loan process, everyone could be in for a big surprise at the end.

The forth question on the Declarations Section VII Of Loan Application states:

• d. Are you a party to a lawsuit?

I always thought that it would have made more sense to have this question as the sixth question after the next two questions which continue to deal with foreclosures and delinquencies on mortgages. But higher powers then me determined that it should be placed at this point.

This question like all the others, if answered incorrectly can create major problems late in the loan process. A Borrower can quickly go from being in great financial shape, and their Debt-To-Income Ratios falling in place, to no longer qualifying because their Debt-To-Income Ratios are now to high. Just like foreclosures, more questions need to asked if the answer to this question is YES.

If the Borrower is the one who has brought a lawsuit against someone else, it needs to be explained, but it most likely will not create their Debt-To-Income Ratios to change. But if they are the ones that a lawsuit is being brought against, there is a risk of an additional financial obligation that could easily put the Borrower over the qualifying Debt-To-Income Ratios for a Loan Program. The potential risk will in a lot of cases cause a loan to be rejected, and it is something that is better explained sooner than later.

Just as I stated before about previous questions, if a Borrower answers NO to this question and it is discovered they do have a lawsuit pending against them. not only will the loan be denied, but they could face criminal charges for lying on the Loan Application. This is because at the bottom of Page #4 Borrowers have to sign attesting to the fact that all of the information that they have provided is the truth to the best of their knowledge.

I am going to end this blog with these two questions because the next question "e. Have you directly or indirectly been obligated on any loan which resulted in foreclosure transfer of title in lieu of foreclosure or judgment?" of the Declarations Section VII Of Loan Application will require a lengthy explanation of the problems that it can create.

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Info about the author:

George Souto is a Loan Officer who can assist you with all your FHA, CHFA, and Conventional mortgage needs in Connecticut. George resides in Middlesex County which includes Middletown, Middlefield, Durham, Cromwell, Portland, Higganum, Haddam, East Haddam, Chester, Deep River, and Essex. George can be contacted at (860) 573-1308 or gsouto@mccuemortgage.com

Yesterday I began a series "Questions That Must Be Asked ............ Declarations Section VII Of Loan Application" which is a follow up to a blog I did on Tuesday about the need for Buyers to be Pre-Approved for a loan "Mortgage/Loan Programs with Low or No Downpayment Still Available In Connecticut ..... Pre-Appoval Letter", and the process that should be followed. In Pre-Approving a Buyer it is EXTREMELY IMPORTANT that the Loan Officer not just look at Credit and Income, or even collect documentation to verify the information that they were given, they have to complete a full Loan Application (1003). Without completing a FULL APPLICATION, mistakes are very likely to happen, because each page of the 1003 has questions if not answered can create surprises and huge problems later on.

As I stated yesterday one of the pages of the Loan Application (1003) that unfortunately does not get the full attention that it deserves, and taken for granted by many Loan Officers, is the Declarations Section VII of Page #4. Each question on the Declarations Section VII Of Loan Application only requires a YES or NO answer, and maybe that is why it does not seem to be given the same level of attention as other parts of the Loan Application.

Today I will start to go through each questions and explain why these Questions Must Be Asked On The Declarations Section VII Of Loan Application and there importance. The first question on Declarations Section VII Of Loan Application states:

• a. Are there any outstanding judgements against you?

Even though judgments will show up on a Credit Report, they maybe reporting wrong, and need to be corrected. A case may also exist that a Borrower just acquired a judgment, and it has not reported on the Credit Report yet.

In the first case it is important to correct a judgment that is being reported incorrectly immediately with the three Credit Bureaus (TransUnion, Equifax, and Experian), because no loan for a Mortgage can be done if the Borrower has an existing judgment.

In the second situation it is equally important for the Borrower to be honest and upfront about any recent judgments that might not be reporting yet on their Credit Report. Just because it is not being reported on their Credit Report yet does not mean that it will not be discovered in the course of the Loan Process, or worst yet just before they are set to Close on the loan. If it is discovered that they have a judgment and did not disclose it, not only will the loan be denied, but they could face criminal charges for lying on the Loan Application. At the bottom of Page #4 Borrowers have to sign attesting to the fact that all of the information that they have provided is the truth to the best of their knowledge.

The second Question That Must Be Asked On The Declarations Section VII Of Loan Application is:

• b. Have you been declared bankrupt in the past 7 years?

As in the case of judgments being reported on the Borrowers Credit Report, so are bankruptcies. However, they are not always being reported correctly as to their status or discharge dates. If a bankruptcy is reported on the Borrowers Credit Report, or the Borrower acknowledges a bankruptcy, it is important to immediately get a copy of their bankruptcy and discharge papers. This is the only way that the actual dates can be verified, and documented.

If a Borrower has had a bankruptcy within the last 7 years, a loan can still be done, but the guidelines for this vary from FHA to Conventional Loans. for example:

• FHA requires that 2 years have past from the time a Chapter 7 Bankruptcy was discharged, and 1 year form the time a Chapter 13 Bankruptcy was discharged.
• In the case of a Conventional Loan (Fannie Mae or Freddie Mac Insured) the time period is 4 years for a Chapter 7 and 2 years for a Chapter 13.

The above time periods are from the time of application for a loan, and not when the loan is expected to Close. It is very important to keep that in mind because a loan could be denied for a matter of a few weeks, if the application process is started to early.

There are exceptions to these guidelines but that will be the topic of another blog that will just focus on bankruptcies. For now I will not go into detail on this matter, because the exceptions are few, and are far from the norm.

Just as in the case of the first question a Borrower could face criminal charges for loan fraud if they do not answer this question truthfully as a result of them signing at the bottom of Page #4 that all of the information that they have provided is the truth to the best of their knowledge.

The problems that these two questions create during the Loan Process, can be easily avoided if the Loan Officer does his/her job at the time of Pre-Approval, by taking a full application at that time and not ignoring the these Question That Must Be Asked On The Declarations Section VII Of Loan Application.

My next blog in this series Questions That Must Be Asked ............ Declarations Section VII Of Loan Application, we will cover questions c, d, and possibly e depending on the length of the blog.

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Info about the author:

George Souto is a Loan Officer who can assist you with all your FHA, CHFA, and Conventional mortgage needs in Connecticut. George resides in Middlesex County which includes Middletown, Middlefield, Durham, Cromwell, Portland, Higganum, Haddam, East Haddam, Chester, Deep River, and Essex. George can be contacted at (860) 573-1308 or gsouto@mccuemortgage.com

On Tuesday I posted a blog on the need for Buyers to be Pre-Approved for a loan Mortgage/Loan Programs with Low or No Downpayment Still Available In Connecticut ..... Pre-Appoval Letter, and the process that should be followed. In Pre-Approving a Buyer it is EXTREMELY IMPORTANT that the Loan Officer not just look at Credit and Income, or even collect documentation to verify the information that they were given, THEY HAVE TO, let me repeat that, THEY HAVE TO complete a full Loan Application (1003). Without completing a FULL APPLICATION, mistakes are very likely to happen, because each page of the 1003 has questions if not answered can create surprises and huge problems later on.

One of the pages of the Loan Application (1003) that unfortunately does not get the full attention that it deserves, and taken for granted by many Loan Officers, is the Declarations Section VII of Page #4. If you take the time to read Section VII you will quickly see the need to ask these questions, and the problems that can follow if they are not all answered.

I plan in the next several blogs to go through each of these questions, in a series titled "Questions That Must Be Asked ............ Declarations Section VII Of Loan Application" and explain the reason why they are there, and the problems that can possibly be created if each and everyone is not properly addressed.

Most of these question will only appear on Section VII of the 1003, and are a valuable resource in identify other parts of the Loan Process/Pre-Approval that might otherwise be overlooked, and require a more careful or even further review. By fully utilizing Section VII of the 1003 we can avoid many of those last minute surprises that we all hate, and make the Home Buying experience a lot less STRESSFUL for everyone.

Starting tomorrow I will beginning this series "Questions That Must Be Asked ............ Declarations Section VII Of Loan Application" and go through each of these questions by covering two or three of them at a time. I hope that by the end of this series of blogs everyone that follows them will have a much better understanding of the importance of these questions, and the need for a careful review of them.

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Info about the author:

George Souto is a Loan Officer who can assist you with all your FHA, CHFA, and Conventional mortgage needs in Connecticut. George resides in Middlesex County which includes Middletown, Middlefield, Durham, Cromwell, Portland, Higganum, Haddam, East Haddam, Chester, Deep River, and Essex. George can be contacted at (860) 573-1308 or gsouto@mccuemortgage.com

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Info about the author:

George Souto is a Loan Officer who can assist you with all your FHA, CHFA, and Conventional mortgage needs in Connecticut. George resides in Middlesex County which includes Middletown, Middlefield, Durham, Cromwell, Portland, Higganum, Haddam, East Haddam, Chester, Deep River, and Essex. George can be contacted at (860) 573-1308 or gsouto@mccuemortgage.com

The last few days have been really hot sticky humid days here in Connecticut, so I have been having to water the grass and flower more so than usual. As I was watering the flowers in front of the house I started to notice that they were beginning to show signs that summer is coming to an end and that fall is around the corner.

It is amazing how mother nature knows what time of the season it is, no matter what the weather is like it knows its time. It knows when it is time to bloom and when it is time to let its leaves fall. This made me wonder, do we have the same sense when it comes to our business? Do we do what needs to be done during our seasons? Do we plant when we need to plant? Do we water and grow during our growing season? And do we fully take advantage of our harvest time?

Funny how something as simple as watering flowers can make us reflect upon ourselves, and are we taking advantage of our seasons to grow our business? These are questions that only we can answer ourselves, and hopefully answer them honestly.

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Info about the author:

George Souto is a Loan Officer who can assist you with all your FHA, CHFA, and Conventional mortgage needs in Connecticut. George resides in Middlesex County which includes Middletown, Middlefield, Durham, Cromwell, Portland, Higganum, Haddam, East Haddam, Chester, Deep River, and Essex. George can be contacted at (860) 573-1308 or gsouto@mccuemortgage.com