Much has been written about how the new loan underwriting standards make it more difficult for buyers to qualify for mortgages.
I have two different buyer clients who are currently being impacted by these new standards.
Both are single professional woman who are looking to buy their first homes.
The first has a sales position where her compensation is both salary and commission based on sales. She has been at her current company for about one and a half years. The lender wants a 2 year history of her commission income before it will count any of it. So this buyer can only use her salary income to qualify. Her commission income is about 50% of her salary income. Clearly the lender’s decision to NOT count her commission income limits her current purchasing power. A year ago, stated income loans were available. This buyer could have just stated her income (salary plus commission) accurately based on a 2 year average and the lender would have used that income amount to qualify.
The second client recently changed companies and the lender will not count the bonus income obtained at the prior company eventhough this buyer will get bonuses at her new company. Her bonuses usually amounted to 10% of her base salary. Again the lender’s decision to NOT count this income limits this buyers purchasing power. A stated income loan would have allowed this buyer to qualify for more.
Understand neither of these buyers were going to lie about their income. They were going to accurately state what their income was for the past 2 years and use that figure on their loan application. No deception would have been contemplated. Both were secure in their ability to earn commission and bonus income as they had in the past in determining what they could afford to pay.
This is a case where fraud and deception on the part of OTHER borrowers and mortgage brokers is limiting these two buyers purchasing power.
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