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Secondary Income problem

I was just told I came back a level III [declined] by Fannie Mae for my home. I have good credit [740] , a job and LTV is 105. I own 2 homes, I live in one and my mother lives in the other. She has paid the mortgage the entire time I have owned it [8 years] and has lived there for 25 years. I was told it was because FM won't count it in my income because it's not a rental and it makes my DTI 74%. Fannie Mae's underwriting guidelines for Secondary Income says they require 2 years of payment history and the liklihood of it continuing. There is a different section relating to Rentals which leads me to think it wasn't because it's not a rental and am wondering what the full story is and if there is a way around it? by Harp2 Inquiry from Los Angeles, California. Jul 5th 2012 Reply


Ralph Richard Guertin (ralph@absolutelowrates.com)
#135 ranked lender in Florida - 792 contributions

if you don't claim on tax returns as income then you can't use it...BUT work with a local mortgage broker to see you you show your in law making payments via 24-36 mths of cancelled checks, i think you could find a lender to take that debt off of you DTI, to bad you didn't live in Florida as I could do it here

Jul 5th 2012
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William J Acres (William_Acres)
#1 ranked lender in Arizona - 8,683 contributions

if your mother has been making the payments and you can prove it with 24 months canceled checks, then you might get a lender to consider removing the payment from your ratios.. Consider working with a local mortgage broker.. They can massage the Fannie Mae LP automated approval system, and can show you exactly what you need to do to get it approved... I'm a Broker here in Scottsdale AZ and I only lend in Arizona. If you or someone you know is looking for financing options, feel free to contact me or pass along my information. 480-287-5714 WilliamAcres.com

Jul 5th 2012
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Peter Botros (PeterBotros)
#70 ranked lender in New York - 895 contributions

Showing Proof of your mother paying the mortgage for more than 24 months can allow you to remove it from consideration in your debt ratio. I would reccomend contacting your local lender for more information.

Jul 6th 2012
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Bert Carpenter (BertCarpenter)
#2 ranked lender in Arizona - 1,823 contributions

Actually a level III is not a decline for Fannie. I have investors that will do a level III under HARP all day long. It sounds like your lender is being too picky. Also, Fannie will allow us to omit from your ratios any debt where you can show the payments are being paid by another for a period of 24 months or longer. Work with a local Mortgage Banker/Broker, rather than one of the big banks or big national mortgage factories. Unlike a bank employee, who is most likely just an order taker, a Mortgage Broker/Banker is Trained, Tested and Licensed in all aspects of Mortgage Origination and has access to loan products of many lenders, not just those of one bank, and can properly guide you. ~ Bert Carpenter, The LoansA2z team of NOVA Home Loans ~ NMLS 40586 ~ www.LoansA2z.com 888-889-9950

Jul 6th 2012
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Robert Le (robert_le)
#622 ranked lender in California - 36 contributions

For the rental, you will need at least 2 years of rental proof. Also, you have to claim the rental on your tax return.Give me a call or email me, we can discuss more options for you. 714-943-6499, robert.le@greenvillemortgage.net

Jul 5th 2012
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Michael Chandler (mchandler15)
#560 ranked lender in California - 7 contributions

Is your mother on title as well? I just actually did a conventional refinance for a father who took a loan out for his son's property. I was able to get the loan approved based on 24 months cancelled checks, son was on title, sons tax returns, and a few other items needed for approval. Give me a call or email to see if I can get this done for you. I'm in Torrance. 562.221.1263 chandlerloans@gmail.com Mike Chandler

Jul 5th 2012
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Larry Gray (lgray_312_247)
#596 ranked lender in California - 1,139 contributions

I just got a mortgage payment/insurance/property tax removed from borrower's debt to incomeratio by showing the mother of one spouse was making the payments from her account.So, yes we do it! Our rate and pricing are quite good...we are a CA. lender...you may goto my website and submit your information at www.larrygraymortgage.com

Jul 6th 2012
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Gregorio Denny (GVDenny)
#256 ranked lender in California - 380 contributions

Level III is not a level for a decline, it's a level of approval. You were working with a lender that has overlays and didn't tell you the full story. I can do a level III APPROVAL for you. I am in California and licensed in California and an expert at HARP. Click my profile for contact info.

Jul 6th 2012
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Thanks to everyone for all of the great advice. It turns out that I'm actually an "EAIII/Ineligible". This is what the broker I was using said: "Only the existing servicer can do a manual underwrite on a Harp Loan. Everyone else needs to follow the automated findings. Your findings came back EAIII/Ineligible" Is this still fixable? I also forgot to include that I have a 5.5% rate and am wondering if I can get a low enough rate to make refinancing worth it? Thanks again to everyone. I really appreciate the advice!

Jul 6th 2012
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