- The Washington Times - Friday, February 29, 2008

Q: Two months ago, I started a new job in Washington and left my old position in San

Diego. The position pays well, and it will be a big boost to my career. My wife is still living in San Diego and I fly home once a month for five days, which is allowed under my new employment contract. The contract is for two years, after which I will move back to San Diego, where we own a home.

I am under contract to purchase a home in Fairfax County. The purchase price is $280,000 and the appraisal came in at $320,000. It is a bank foreclosed property, which explains why I got such a great deal.

I applied for a 90 percent loan from a broker in California. At the last minute, the broker tells me that the lender, a large well-known California mortgage company, is rejecting the loan because they believe my wife and I are getting divorced. We have been happily married for 15 years. My wife has a senior job with the city of San Diego and we decided that we would be “bicoastal” for two years.

We have submitted pay stubs, bank statements and my employment contract. They have everything they could possibly want.

Our broker says we easily qualify for the new loan but the lender thinks that I will be paying alimony. The whole thing is absurd.

Can you advise us? I don’t want to lose this house. We have great credit, income and a 10 percent down payment.

A: If everything you say is true, I’m at a loss for words. I’m no legal expert, but it seems to me that the California lender is dangerously close to violating equal opportunity laws. Let me dissect this situation as I understand it.

m You have a two-year employment contract with an employer in the Washington area, which you started two months ago. You plan on fulfilling the contract and then moving back to San Diego.

m You will be occupying the property as your primary residence.

m Your wife is remaining in San Diego and will continue her job.

m You have good credit and adequate verifiable income and assets to qualify for the loan requested.

Has the mortgage meltdown over the last two years created cobwebs in the brain of the underwriter? I’ve seen some far-fetched underwriting conditions in my time but this takes the cake. Let’s take a look the standard mortgage loan application that you signed.

The application asks the applicants for their marital status: Married, Single or Separated. You very likely indicated that you are married. “Separated” means married but legally separated with a legal separation agreement.

The applicants are asked if they are obligated to pay alimony or child support. I’m sure you checked “no.”

The applicants are asked if they intend on occupying the property as their primary residence. You should have checked “yes” and your wife should have checked “no.”

Finally, in the text just above the signature line at the end of the application, there is a statement that says that the undersigned acknowledges that “the information provided in this application is true and correct … .” It further states that any intentional misrepresentation is subject to criminal penalties.

The way I see it, your underwriter is suspecting that you have submitted a fraudulent loan application. It’s certainly part of an underwriter’s job to ensure that the information contained in an application meets the test of common sense. If something appears “fishy,” he or she has every right to ask for clarification.

However, in your case, I see nothing at all that would raise a flag of suspicion. My advice is to seek out a recommendation for a competent mortgage broker from trusted friends or co-workers and reapply for a rush closing. Unless I’m missing something, your application should be a no-brainer.

Henry Savage is president of PMC Mortgage in Alexandria. Reach him by e-mail (henrysavage @pmcmortgage.com).

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