“Remote Work” Status Clouds  Loan Approvals!

DUs and successful COEs have recently become more problematic for all “Remote workers” (hence known as RWs).

“RWs” are viewed as possible “straw buyers” by every lender.

 

“Occupancy Fraud” is a hot-button item with all lenders, so ALL buyers working remotely (more than 1 hour/60 miles away) are scrutinized. 

Falsifying “Owner Occupancy” Status Gets New Criminal Scrutiny

Other Factors that Kill RW Loan Approvals

1) SoCal’s location, tourist industry, and Airbnb opportunities make it a prime target for fraudsters, drawing attention to the RWs from out-of-state.

2) The “Buyer has issues”: Job History

The shorter the RW’s time at their current job, the harder it will be to convince an underwriter that the buyer is legit if there is a job gap (other than family leave or disability), and the more intense the underwriter’s scrutiny.

3) Location: The farther away from where the RW currently resides from their home purchase, the bigger the problem.

The more “time zones” away from their office location, the bigger the challenge for loan approval. The farther away from the corporate HQ is from the RW’s (new) home, the more scrutiny before COE.

3) The Employer

Every RW who with a job change in the last two years must get a

current letter from the HR department acknowledging the relocation.

Here is a sample of a verification of employment form that is typically used for a current employer  

Documentation from HR
Few employees (ever) like dealing with HR.

Every lender will require a letter stating that “HR is aware of the new geographical change,” and the job duties will continue. Asking buyers to share their new intentions with HR is often “cringy” from the RW’s “POV.”

It may even expose the RW’s “hidden agenda” of relocating to SoCal

and leap-frogging into a new company while drawing a current paycheck.

Getting a False DU Loan Approval.

I have often been told that DU’s can be made to say anything. That’s true.

However, only a fraudster or an MLO desperate to stay on his job (for salary purposes) would engage in such behavior. It’s better to kill the deal from the start than give any false hope and waste everyone’s time, 

“In Conclusion”

Total “DU” loan approvals are crucial for sellers accepting offers.

With FHA and VA offers, they are all but required when competing against buyers with more of a down payment.

“DU” Loan Approvals! Never Lose a Buyer Again “

A call from your MLO to the listing agent before the seller decides can increase the chances of accepting a “minimal down” offer.

Here are the items needed for a typical DU loan approval.

1) Self-employed Buyers” Profit and loss statement for all businesses; 

2) Name/Phone/Contact for the person in “HR“ to verify employment 

3) If working remotely, letters are needed from the HR Dept. clearly “stating

that the employees [remote work]” will continue.”

4) Last TWO (2) W-2 Statements for each borrower and 1099s or K-1 statements (if applicable);

5) Last TWO (2) Personal Tax Returns, all pages, all schedules;

6) Last TWO (2) recent consecutive asset statements for all asset accounts (checking, savings, investment, IRA, 401k, etc.).

7) Last two pay stubs

8) Copy of Photo ID

If Buyers Own a Current Property

9) Homeowners insurance declaration page with Policy Number and Policy Info for the primary home and each rental home;

10) HOA Monthly Billing Statement on the primary home and every rental home;

11) A copy of a mortgage billing statement on the primary home and every rental home;

12) Solar Panels? — If you own them, show proof it’s paid off in full. If you lease the panels, we’ll need a full copy of the lease.

13) If assets are in trust: A Copy of the entire Living Trust or an official “Trust Certification” and any amendments to the living trust.