detlef Posted January 31, 2012 Share Posted January 31, 2012 (edited) OK, so last week I was all set to post a rant about some of the lame hoops we had to jump through to get this thing done. That I completely understand that there were certainly some things they needed to see and how stunned I was about how little documentation we actually had to provide the first time we got a home loan. Of course, in our case, we were buying a home that we could totally afford so it didn't matter, but I was still amazed at how much they just took our word for it. That, of course, was during the era of "no doc" loans. I was all ready to talk about how insanely the pendulum swung in the other direction. And specifically, the ends I had to go to in order to prove I was self employed. It seemed that all my tax forms that showed me playing self employment tax. That included K1s that showed not only dividend income but also guaranteed distributions from these businesses somehow were not enough. That, anyone who knew anything about reading a tax return would realize how plainly obvious it was that I was self employed. When I complained to my loan officer, he agreed that it was stupid but that Freddie and Fannie changed the rules recently and were requiring more and more documentation. Of course, the irony is that the documentation they were looking for didn't say much about my involvement with the businesses, simply that they existed. Something I assumed was basically established by the fact that I had K-1s from the same, stamped by a CPA. Then I saw the news yesterday about Freddie Mac essentially betting against people getting lower rates on their homes and it all made sense. Bastards were just making up hurdles. Just one more thing standing in the way. In fact, if our specific situation wasn't what it was and we were changing both the term and interest rate as much as we were, I may have been tempted to just say, "screw it" if they would have come at me with, yet another, "Oh by the way, could you get us a copy of X?" For the record, we got the loan and close tomorrow. Then again, we're so qualified for this loan it would have been a complete and total farce if we hadn't gotten it. Edited January 31, 2012 by detlef Quote Link to comment Share on other sites More sharing options...
SEC=UGA Posted January 31, 2012 Share Posted January 31, 2012 OK, so last week I was all set to post a rant about some of the lame hoops we had to jump through to get this thing done. That I completely understand that there were certainly some things they needed to see and how stunned I was about how little documentation we actually had to provide the first time we got a home loan. Of course, in our case, we were buying a home that we could totally afford so it didn't matter, but I was still amazed at how much they just took our word for it. That, of course, was during the era of "no doc" loans. I was all ready to talk about how insanely the pendulum swung in the other direction. And specifically, the ends I had to go to in order to prove I was self employed. It seemed that all my tax forms that showed me playing self employment tax. That included K1s that showed not only dividend income but also guaranteed distributions from these businesses somehow were not enough. That, anyone who knew anything about reading a tax return would realize how plainly obvious it was that I was self employed. When I complained to my loan officer, he agreed that it was stupid but that Freddie and Fannie changed the rules recently and were requiring more and more documentation. Of course, the irony is that the documentation they were looking for didn't say much about my involvement with the businesses, simply that they existed. Something I assumed was basically established by the fact that I had K-1s from the same, stamped by a CPA. Then I saw the news yesterday about Freddie Mac essentially betting against people getting lower rates on their homes and it all made sense. Bastards were just making up hurdles. Just one more thing standing in the way. In fact, if our specific situation wasn't what it was and we were changing both the term and interest rate as much as we were, I may have been tempted to just say, "screw it" if they would have come at me with, yet another, "Oh by the way, could you get us a copy of X?" For the record, we got the loan and close tomorrow. Then again, we're so qualified for this loan it would have been a complete and total farce if we hadn't gotten it. Congrats on the refi. I saw the same segment on CBS, I believe... The worse part of it is that it wasn't just people trying to refi for the hell of it, it was people who were trying to refi under the Fed Gov program to assist people who had gotten in over their heads. Fannie/Freddie get all this tax payer money to assist those homeowners, they won't refi them and then invest their money in portfolios based on these higher interest rate mortgages... Quote Link to comment Share on other sites More sharing options...
Ursa Majoris Posted January 31, 2012 Share Posted January 31, 2012 Congrats on the refi. I saw the same segment on CBS, I believe... The worse part of it is that it wasn't just people trying to refi for the hell of it, it was people who were trying to refi under the Fed Gov program to assist people who had gotten in over their heads. Fannie/Freddie get all this tax payer money to assist those homeowners, they won't refi them and then invest their money in portfolios based on these higher interest rate mortgages... I read about the whole farrago this morning. I think I'm leaning towards nationalizing them completely and selling them off as fast as possible, removing them from the field altogether. Lenders should take the risk on mortgages, not some taxpayer underwritten quasi-governmental backstop. Quote Link to comment Share on other sites More sharing options...
Square Posted January 31, 2012 Share Posted January 31, 2012 I read about the whole farrago this morning. I think I'm leaning towards nationalizing them completely and selling them off as fast as possible, removing them from the field altogether. Lenders should take the risk on mortgages, not some taxpayer underwritten quasi-governmental backstop. If you did that, how would you control the population by every means possible? Seriously though, the mortgage process always seemed a little funny to me. I remember there being some document that they said I could get by with a screen capture emailed into them. I kind of went back and forth about how silly a "real" documentation would be if all you need is jpeg of something that looked like a document. That I could photoshop or spoof almost the entire thing and it sounds like they are only trying to keep lazy or stupid criminals from getting away with something. Another one was that I had to claim some cash I used as a down payment as a gift just so they had a "source". It just wasn't possible I had cash on hand. If the cash had been in my checking account for 6 months it's ok, but if it has just recently been put in my account than I cannot get a mortgage (and I think the only reason they knew this was because I was honest with them). They gave me some line about drug dealers/traffickers but it just seemed dumb as I'm sure there were plenty of ways around it. Quote Link to comment Share on other sites More sharing options...
wiegie Posted January 31, 2012 Share Posted January 31, 2012 Another one was that I had to claim some cash I used as a down payment as a gift just so they had a "source". It just wasn't possible I had cash on hand. If the cash had been in my checking account for 6 months it's ok, but if it has just recently been put in my account than I cannot get a mortgage (and I think the only reason they knew this was because I was honest with them). They gave me some line about drug dealers/traffickers but it just seemed dumb as I'm sure there were plenty of ways around it. Really it is because they were concerned that you had borrowed the money from somebody else--the reason being that the less of your own money you use as a down payment, the more likely you are to default. Quote Link to comment Share on other sites More sharing options...
Square Posted January 31, 2012 Share Posted January 31, 2012 Really it is because they were concerned that you had borrowed the money from somebody else--the reason being that the less of your own money you use as a down payment, the more likely you are to default. So if I borrowed the money but had someone claim they "gifted" it to me (since there is no real downside for them if they lie) it wouldn't really stop anything would it? I guess it just seems like only lazy and stupid people wouldn't be able to find away around these measures. It's just feels like TSA security where it's more theater than anything real. Quote Link to comment Share on other sites More sharing options...
Big Country Posted January 31, 2012 Share Posted January 31, 2012 So if I borrowed the money but had someone claim they "gifted" it to me (since there is no real downside for them if they lie) it wouldn't really stop anything would it? I guess it just seems like only lazy and stupid people wouldn't be able to find away around these measures. It's just feels like TSA security where it's more theater than anything real. Both have tax implications and both have an effect on your mortgage application. A "gift" means there is no expectation of pay back, and it is tax free to the recipient. There are also federal limits on how much one can gift in a lifetime. A "loan" has an expectation of payback, and depending on how you document the loan, there is tax due by the loaner on the interest earned, and if it is specifically tied to your house, you in theory could deduct the interest on your taxes. The loan however affects your debt to income ratio. So yes, you could have someone loan you money but claim it as a gift, and more than likely nothing would happen, but in theory there could be a big legal mess should something go awry. We had to jump through some similar hoops when we were buying our home nearly 3 years ago as some of the money we were using for a down payment came from a life insurance payout (not a hugh amount, but a good portion of the down payment), so we had to document the source of the money to show that it was not from a loan. Quote Link to comment Share on other sites More sharing options...
Square Posted January 31, 2012 Share Posted January 31, 2012 Both have tax implications and both have an effect on your mortgage application. A "gift" means there is no expectation of pay back, and it is tax free to the recipient. There are also federal limits on how much one can gift in a lifetime. A "loan" has an expectation of payback, and depending on how you document the loan, there is tax due by the loaner on the interest earned, and if it is specifically tied to your house, you in theory could deduct the interest on your taxes. The loan however affects your debt to income ratio. So yes, you could have someone loan you money but claim it as a gift, and more than likely nothing would happen, but in theory there could be a big legal mess should something go awry. We had to jump through some similar hoops when we were buying our home nearly 3 years ago as some of the money we were using for a down payment came from a life insurance payout (not a hugh amount, but a good portion of the down payment), so we had to document the source of the money to show that it was not from a loan. Even with all that being said, if I had deposited it into my checking account 6 months prior it wouldn't have even been brought up when I wrote a check for the down payment (or if possibly earlier than that if I just hadn't said something). So I get there are some technicalities but when I look at it as a whole it seems like it isn't much of a safeguard against anything. But these type of financial products aren't really my thing. Outside of a mortgage we don't borrow money and haven't in a pretty long time so maybe this is stuff is normal for loans. Quote Link to comment Share on other sites More sharing options...
Sugar Magnolia Posted January 31, 2012 Share Posted January 31, 2012 OK, so last week I was all set to post a rant about some of the lame hoops we had to jump through to get this thing done. That I completely understand that there were certainly some things they needed to see and how stunned I was about how little documentation we actually had to provide the first time we got a home loan. Of course, in our case, we were buying a home that we could totally afford so it didn't matter, but I was still amazed at how much they just took our word for it. That, of course, was during the era of "no doc" loans. I was all ready to talk about how insanely the pendulum swung in the other direction. And specifically, the ends I had to go to in order to prove I was self employed. It seemed that all my tax forms that showed me playing self employment tax. That included K1s that showed not only dividend income but also guaranteed distributions from these businesses somehow were not enough. That, anyone who knew anything about reading a tax return would realize how plainly obvious it was that I was self employed. When I complained to my loan officer, he agreed that it was stupid but that Freddie and Fannie changed the rules recently and were requiring more and more documentation. Of course, the irony is that the documentation they were looking for didn't say much about my involvement with the businesses, simply that they existed. Something I assumed was basically established by the fact that I had K-1s from the same, stamped by a CPA. Then I saw the news yesterday about Freddie Mac essentially betting against people getting lower rates on their homes and it all made sense. Bastards were just making up hurdles. Just one more thing standing in the way. In fact, if our specific situation wasn't what it was and we were changing both the term and interest rate as much as we were, I may have been tempted to just say, "screw it" if they would have come at me with, yet another, "Oh by the way, could you get us a copy of X?" For the record, we got the loan and close tomorrow. Then again, we're so qualified for this loan it would have been a complete and total farce if we hadn't gotten it. I think things have gone back to the norm of the old days, and I always had to go through hoops as a self employed person. Our last loan in 1993, we were putting 70% down on the house.. We had 3x the value of the home we were buying in investment vehicles. So, we were pretty low risk. At the time, I was an independent sales rep. I had to write a letter to the lender saying by me moving 90 miles, it would not impact my business. The other thing is, we could have qualified for the loan with just my husband's income, we didn't even need to report mine. I don't know if they do this now, but we had to also provide 1 maybe even 2 years of bank statements, and tax returns. We haven't applied for a loan, or done a re-fi since '93 thank goodness. What a pain in the arse. Quote Link to comment Share on other sites More sharing options...
detlef Posted January 31, 2012 Author Share Posted January 31, 2012 Sort of a funny aside that doesn't exactly pertain to the lame red tape issues I mentioned above. I just got a call (on my cell phone) from the bank issuing the loan asking me to verify my relationship to one of the LLCs that I claimed as one of my businesses. I'm pretty sure I could have lied if I needed to. "I'm the managing and majority member." "Great, that's what I have on your application, just wanted to make sure that was the case. Have a nice day." "Glad I could help." Quote Link to comment Share on other sites More sharing options...
Square Posted January 31, 2012 Share Posted January 31, 2012 Sort of a funny aside that doesn't exactly pertain to the lame red tape issues I mentioned above. I just got a call (on my cell phone) from the bank issuing the loan asking me to verify my relationship to one of the LLCs that I claimed as one of my businesses. I'm pretty sure I could have lied if I needed to. "I'm the managing and majority member." "Great, that's what I have on your application, just wanted to make sure that was the case. Have a nice day." "Glad I could help." We had a bid we were working on for a government job recently and there were all these hoops you had to jump through to get a copy of the plans. So after all is said and done they still had to call the office and my quotes guy had to pass the phone to a "manager" about a half dozen times over the week to get "approval" to release the plans to him. I got one of those calls and basically it went like this: Government core of engineers guy: "are you the manager?" "yes" "Do you approve of releasing these drawings to X?" "yes" "Ok, thank you for the confirmation". Pure genius Quote Link to comment Share on other sites More sharing options...
detlef Posted January 31, 2012 Author Share Posted January 31, 2012 We had a bid we were working on for a government job recently and there were all these hoops you had to jump through to get a copy of the plans. So after all is said and done they still had to call the office and my quotes guy had to pass the phone to a "manager" about a half dozen times over the week to get "approval" to release the plans to him. I got one of those calls and basically it went like this: Government core of engineers guy: "are you the manager?" "yes" "Do you approve of releasing these drawings to X?" "yes" "Ok, thank you for the confirmation". Pure genius Hey, whatever works. Quote Link to comment Share on other sites More sharing options...
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