Monday, July 4, 2011 - Article by: SunTrust Mortgage Charlottesville - VP of Mortgage Lending -
We have all experienced the stricter underwriting requirements due to heightened scrutiny from Fannie. We thought it might be helpful to provide some items that Fannie view as 'Red Flags'. These 'Red Flags' do not mean a loan isn't possible, rather that additional questions must be answered and possibly additional documentation. By knowing these alerts, we can better prepare our clients up-front to answer the questions and provide accompanying documentation before they are asked. Others provide evidence of why a buyer should engage the services of a real estate professional. Hope those can help you. Below are some 'Red Flags' listed by Fannie Mae.
1. Non-Arms length transaction: seller is a realtor, relative, employer, etc.
2. Seller is not currently on title.
3. Purchaser(s) are added to/deleted from the sales contract.
4. Purchaser is moving down in home value.
5. Earnest money deposit equals the full down payment or is an 'odd' amount.
6. Multiple earnest money checks have been used (additional alerts when the checks are written on different dates).
7. Address on the earnest money check varies from that of the borrower's address on the contract and/or loan application.
8. No real estate agent is involved.
9. Purchase contract is 'boiler plate' with limited fill-in-the-blanks not reflective of the true negotiation (buyer not represented by a real estate agent).
Sandra S. Madison
Senior Mortgage Loan Originator
NMLS # 43902 & MLO-7436VA
(434) 566-2420 direct line
682 Berkmar Circle
Charlottesville, VA 22901
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