- The Washington Times - Thursday, October 28, 2010

Happy Halloween. If you are one of the many folks who qualify for a loan these days and have a refinance in process, you probably already are experiencing some pretty scary stuff.

After 18 years here at my little company, PMC Mortgage, I would suggest that all readers who are refinancing take the same advice I’m giving my clients: Give your loan officer whatever information he or she requests, no matter how ridiculous it may appear.

While the credit crunch is thawing slowly, I can tell you that consumers who are looking for credit still have no rights. If you want one of the great mortgage rates offered today, you had better do what you’re asked. Be prepared to turn yourself into a circus bear, bare your wares and do whatever the lender asks.

If you want a zero-cost fixed rate at 4.50 percent, that is.

It’s worth it, folks. Rates are great, and qualified homeowners are refinancing in droves. But the paperwork and nonsensical underwriting conditions persist.

I recently received an e-mail from one of my mortgage wholesale investors, warning of a continued paper-heavy and documentation-laden mortgage process.

Mortgage giant Fannie Mae, which makes the rules, described its concern for “loan quality” rather than loan performance. While loan performance, the percentage of on-time repayments, has improved dramatically, loan quality, measured by whether the information in the file supports the loan delivered, has not. This, to me, means that well-qualified borrowers will continue to be burdened with ridiculous paperwork.

Here’s a quick random question-and-answer session in hopes of explaining the reason these lenders want paperwork.

Question: Why do I need to provide all of the pages of my bank statements, including the one that is left “intentionally blank”?

Answer: Because the lender thinks that missing page just might hold some important debt information that would jeopardize your loan.

Question: Why do I have to provide tax returns when I’m salaried and I already provided my W-2s?

Answer: There could be a million reasons. Just fork over the tax returns if you want the loan.

Question: Why do I have to write a letter explaining an inquiry on my credit report?

Answer: Because the lender thinks you may have taken out a different loan while your mortgage refinance was in process and now you may not qualify. If that’s not the case, simply write a letter stating you have no idea about the inquiry and no new credit was established.

Question: I tore the tag off a mattress several years ago, even though the tag said it shouldn’t be removed under penalty of law. Why do I need to write an explanation letter?

Answer: Just kidding. You get the point.

Rates are good. Take advantage of that. Find a good, reliable loan officer and be prepared to be pulled around by a string.

Send e-mail to henrysavage@pmcmortgage.com.

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