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We refinanced last year and everything went smoothly. We refinanced again this year with the same people and bank. Tool longer on the second refi but thought it went fairly well. Loan was approved closed and funded earlier this month. Got a call saying we missed the box on the app that shows my wife is self employed on both refi applications. This was an oversight on my part not intentional and not caught on their end. She is majority owner of an LLC that has 9 employees, The bank is requesting 2019 business K1 and profit loss statements. We sent them from our accountant. They are now asking for the last three months all pages including blank pages of the business bank statements or they will have us investigated for mortgage fraud. There is nothing in our credit history or tax returns to suggest this. Is it legitimate practice to ask an LLC for the bank statements when they have the other information and every thing was approved, closed, funded and recorded ? by chevy12851619 from Phoenix, Arizona. Mar 29th 2021 Reply

Bert Carpenter (BertCarpenter)
#1 ranked lender in Arizona - 2,423 contributions

What you are being asked (a current YTD P & L and the last 3-months bank statements to support the P & L), is a requirement for all self-employed income under Fannie and Freddie (the 'Agencies') guidelines and has been for about the last 10-12 months. Get it to them and resolve this easily and quickly. In reality, had you checked the self-employed box correctly, they would have asked for the same thing they are asking for now, and your loan likely would still have been approved. Had you refused to provide the statements then, your new loan would NOT have been approved. The lender needs to be able to sell the loan to the Agency it was underwritten to. They can't without the bank statements. Since most lenders sell all of their loans to the Agencies, if you refuse to provide the statements, their only option is to find a way to leverage you to do what is required. You indicated that not checking the self-employed box was an oversight. I doubt they believe your intent was to deliberately not check the box so you could get approved, but the fact remains that YOU are responsible for making sure ALL of the information on the application is factually correct. If it is not factually correct, then it COULD be considered a form of fraud. Their only option if you don't provide the requested documentation would be to force your hand. So here is the big question. If you had checked the box, and they had asked you for the bank statements BEFORE the loan was approved, would you have provided them? I think we both know that you would have. You probably would have asked why they were needed now when they were not needed on the previous loans, but you would have provided them. If I am correct, then provide them and move on.On a final note, and to your last question. Yes, it is a legitimate practice to request missing items after closing. But threatening to launch a fraud investigation? Not so much. I have been involved in many Post-Closing documentation requests over the years. and making sure the borrower understands what is being asked for and specifically why it is being asked for is the key to getting them to comply. It sounds like the Loan Officer/Lender could have done a better job of articulating to you WHY it is necessary to get the docs. I hope this helps. ~ Bert Carpenter, The LoansA2z Team of NEXA Mortgage ~ NMLS 40586 ~ Licensed in AZ, CA, GA, IL, OR & WA... In fact, NEXA is licensed in all states except MA and NY and we are pending approval in VA, so give us a call. ~ 480-889-9000.

Mar 29th 2021
Joe Metzler (JoeMetzler)
#1 ranked lender in Minnesota - 4,703 contributions

What they are asking for is normal self-employed loan guidelines. They can't go back and unclose the loan, although they CAN call the loan due and payable because of fraud, and go through the forced foreclosure process. Threats of investigation are likely a pile of crap from a Loan Officer who is getting yelled at. With that said, they now have an unsellable loan. It will cost them a lot of money for this error. Now with that said, mortgage fraud comes in all sorts of variations, including income fraud. Mortgage is fraud is investigated by the FBI. Supplying the documents will help them greatly, and unless you have something to hide, just help them out.

Mar 30th 2021
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