Judgment on Ability to Repay
Question
#1: Has the loan originator committed to a process that allows the company to
properly evaluate the borrower’s ability to pay this new obligation?
Question
#2: If he changed the loan product to a fixed rate would this process be more
acceptable?
www.mymortgagetrainer.com
www.mymortgagetrainer.com
#1
ReplyDeleteNo, the loan originator has not done enough for the company to properly evaluate the borrower.
#2
No, changing it to a fixed rate will not reduce the risk to the company.
Q1
ReplyDeleteThe loan originator DID NOT commit to a process to allow for proper evaluation. He did not request any paperwork, documentation, or additional proof beyond the credit score. More information is required in order to ensure that the buyer can meet financial commitments and payments on the loan.
Q2
Changing the rate would NOT constitute for proper evaluation. The same documents would still be needed even if his payment history and credit show he is able to follow through with the new loan.
1. This loan originator has put his company at risk if it is to adhere to the commitment the loan originator made to the consumer.
ReplyDelete2. No.
A #1:
ReplyDeleteNo, the MLO is not taking into consideration that the loan is a 3/1 ARM loan, meaning the rate could potentially go up after the initial 3 years of the fixed rate at 2% and the consumer may not be able to make the payment at the fully indexed rate. The MLO is putting the company at risk by offering this product without doing the proper due diligence.
A #2:
No, making this loan a fixed rated loan does not make it any less risky if you do not take the proper steps to make sure the consumer is able to make the payments on this loan.
1. The loan originator has not gathered enough information to adequately assess the credit worthiness of the consumer.
ReplyDelete2. Changing to a fixed rate loan would not make it more acceptable. The proper steps should still be taken to ensure the consumer is able to repay the loan.
Ability To Repay
ReplyDelete1. No, more verification should have been requested and documentation to back the verification.
2. Fixed rate should make no difference. Just seems like the originator was being lazy to me.
1 of 1 A:
ReplyDeleteNo, need to verify that the client is able to repay the loan with all proper paperwork. Just because the last loan amortized properly before does not mean that he is financially and responsibly able in taking care of his back-end dept.
1 of 1 B: No, same reason applies
1 of 2
ReplyDeleteThe MLO has overpromised in her commitment to be able to close on this loan in a couple of weeks because the mortgage company still needs to go through the required steps in verifying identity & necessary ratios to ensure repayment of the debt. There needs to be more documentation to support the verbal reporting & verifications completed.
2 of 2
No, in this case the same actions need to take place to rule out risk for the lender and verify the client can repay the loan.
1 of 2
ReplyDeleteNo, ATR is required on all loans regardless. All loans need to ensure the borrower has the ability to repay the loan from income verification
2 of 2
No the same answer applies to this one. Changing products still requires income verification