Having problems with Lenders...Question!!!

[chrissy30004]

My husband and I are in the process of trying to buy a lot in Point Washington (the woods).
His income is steady and consistant, and his credit score is almost perfect! We have never been late on any mortgage!
Here is the problem...He works for a window and door company and pretty much started his own company selling for them. We have not found a lender anywhere that will give us a loan until he has had the company for 2 years. This has been terrible news and I just keep thinking there has to be some way. Has anyone else dealt with this problem and if so, do you know of anyway to get around this?
Thanks!

[SHELLY]

My husband and I are in the process of trying to buy a lot in Point Washington (the woods).
His income is steady and consistant, and his credit score is almost perfect! We have never been late on any mortgage!
Here is the problem...He works for a window and door company and pretty much started his own company selling for them. We have not found a lender anywhere that will give us a loan until he has had the company for 2 years. This has been terrible news and I just keep thinking there has to be some way. Has anyone else dealt with this problem and if so, do you know of anyway to get around this?
Thanks!

What are you telling them your lot is for? Is it an investment or is there a chance that you've gotta borrow more to build a new house.

I suspect this is pretty much what is going to be normal for the time being.

You can get around it by paying cash.

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[chrissy30004]

I am pretty sure he told them it was to build on...I can even see coming up with 1/2 the amount some how or another, but not the entire amount. YOu would think with the market as bad as it is, they would maybe throw us a bone. What a nightmare!!

[SHELLY]

YOu would think with the market as bad as it is, they would maybe throw us a bone. What a nightmare!!

....they threw too many bones in the previous years--that's why the market is as bad as it is now.

I also think they may be having a problem not only with the fact that your husband's business is new...but also that is a "window and door" company.

Do you own a home in Gulf Breeze and have to sell that too before you move? If not, can't you just move into a rental in the area?

Maybe you can find a desperate lot owner that is willing to self-finance.



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[Mango]

Two years self employment has always been the norm as per underwriting guidelines. The income used is derived from an average of the past 2 years for any self employed Borrower. However, I've had Borrowers who worked for Companies in the past as W2 wage earners, then became 1099 contractors for same/other companies and apply with less than 2 years and get approved. The key was consistent employment in the SAME industry and type of profession. I provided copies of cancelled checks evidencing all income for at least the past 3-4 months, copies of the last tax return and YTD P&L. But getting a loan through with less than 1 year s/e income is next to impossible. If your husband just started self employment there is no way of judging the adjusted gross income he will eventually wind up paying taxes on. Secondly, the building industry is having a downturn, and how is an underwriter to know if he was laid off and turned to s/e for that reason. Lastly, lot loans are higher risk loans and the terms and underwriting criteria are more stringent than a single family residence.
If your husband meets some of the criteria I described above, you might have a better shot purchasing from a builder or an already built home depending on the downpayment, and sale/contract of sale of current residence.
Shelly's suggestions are also sound considerations especially if you have another home to sell.

[YoungFT]

If the lender gets a credit score north of 780, employment in the same field for past two years (not necessarily same job), verified assets for down payment and assets for reserves - income may not be an issue.

Good lenders will run this through the loan package "Desktop Underwriter" and be given an approval with waivers for documents for items like W-2s, pay stubs, etc.

While stated income loans are more rare, banks are getting them done. Call Bank of America - they're trying to steak share as everyone else retrenches.

[Mango]

Desktop underwriter is not used on lot loans. The agencies do not purchase them. If you run a solid credit loan through the agencies for a house, you'll get an approve response, but waivers will only go so far as the underwriter and how much waiver ability they have with either Freddie or Fannie when you've been self employed for <2 yrs. It becomes a judgement call and some u/wers are not willing to stretch that far, especially now. Believe it or not, Banks like Wells Fargo are still offering stated income loans, but not on lot loans that I am aware of. Even stated income programs want 2 yrs or more self employment.
Try Sovereign Bank. (http://www.sovereignbank.com/personal/borrowing/mortgages/default.asp) Worth giving them a call.
They offer land lot loans.

[Pirate]

Mango, correct me if I am wrong, with real comps (not that they exist there) couldn't you still get a stated income loan with 50 percent down on damn near any piece of property ... house or not?

[Mango]

Mango, correct me if I am wrong, but with real comps ( not that they exist there ) couldn't you still get a stated income loan with 50 percent down on damn near any piece of property house or not?

Yes, some Banks/Commercial Lenders still have No Doc loans which is different than a stated income loan but you pay through the nose for it and must have impeccable credit. Stated income loans, you still have to list your employment, but not income and the rule is s/e >=2 yrs. No Doc you do not complete anything for employment or income on a loan application. With 50% down, even in a declining market, it's still a relatively low risk loan in my opinion and I am conservative.

I see Suntrust (http://www.suntrustmortgage.com/Nodoc.asp?stmleftnav=3.5) still offers NO DOC. I am not sure they will do it on a lot loan. I do not offer loans in FL, and Suntrust does not offer in the N.E., so I am not familiar with their programs.

I think Shelly would call No Docs liar loans, but like I said I am conservative and have never had a loan default on payments, ever.
If someone came to me with in this predicament, they had impeccable credit, a past timely mortgage, needed to move, and showed me a contract of sale for their current home, I would feel comfortable with offering this type of loan if I didn't feel I could get it through traditionally.

Unfortunately in the past, these loan types and LTV's were too high and they were abused, hence the mortgage meltdown we are experiencing.

[SHELLY]

I think Shelly would call No Docs liar loans

...Shelly and a good deal of the free (and not-so-free) world call them "Liar Loans"

I'm thinking of breaking away from the pack....how does "Salary-Challenged Loans" sound?


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[Mango]

...Shelly and a good deal of the free (and not-so-free) world call them "Liar Loans"

I'm thinking of breaking away from the pack....how does "Salary-Challenged Loans" sound?.

It's beats "Income Challenged"

[SSGA]

We were in a similar position some time ago and used our local bank that knew us personally. We had great credit and sufficient assets, so the less than 2 years wasn't unduly worrisome for us.

Of course we live in a town the size of my thumbnail and our banker had been my sunday school teacher when I was five-I guess he assumed some of that had sunk in and I wouldn't default!:D

My point is...do you have a local banker?

[Pirate]

Yes, some Banks/Commercial Lenders still have No Doc loans which is different than a stated income loan but you pay through the nose for it and must have impeccable credit. Stated income loans, you still have to list your employment, but not income and the rule is s/e >=2 yrs. No Doc you do not complete anything for employment or income on a loan application. With 50% down, even in a declining market, it's still a relatively low risk loan in my opinion and I am conservative.

I see Suntrust (http://www.suntrustmortgage.com/Nodoc.asp?stmleftnav=3.5) still offers NO DOC. I am not sure they will do it on a lot loan. I do not offer loans in FL, and Suntrust does not offer in the N.E., so I am not familiar with their programs.

I think Shelly would call No Docs liar loans, but like I said I am conservative and have never had a loan default on payments, ever.
If someone came to me with in this predicament, they had impeccable credit, a past timely mortgage, needed to move, and showed me a contract of sale for their current home, I would feel comfortable with offering this type of loan if I didn't feel I could get it through traditionally.

Unfortunately in the past, these loan types and LTV's were too high and they were abused, hence the mortgage meltdown we are experiencing.

Thanks for the reply. I always defer to the experts. I surely didn't say this was a great product, I was only mentioning that with half down a low or no doc was still pretty easy to come by. Chrissy said they could come up with half so this may be an option. In the glory days, if you just had a pulse, 5 percent (or less) down and a 550 beacon you could get that 5 percent a year max escalation ARM easy. How the underwriters ever expected these things to get paid is beyond me but they sure looked great on a pie chart or graph.

[SHELLY]

How the underwriters ever expected these things to get paid is beyond me but they sure looked great on a pie chart or graph.

Underwriters couldn't care less if they were paid or not...they sold those suckers off before the ink was dry.


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[chrissy30004]

Yes, my hubby has a credit score of somewhere close to 780. The crazy thing is, even through the terrible market, the company he works for is not struggeling in the least! Yes, he works for a company, but he is an independant contractor for them. He pretty much just uses them for his paychecks. This company sells to mostly custom builders and even though it has definitely been slower, it is still doing wonderful!! We do own a home already, one here in gulf breeze ,and we own two rentals in Atlanta. He does not want to sell those because they make us money. I mentioned to him that we should rent something until the market gets better, but he wont have it. He says its throwing away money. He is also dead set on building our own home, as we have not found a home we like enough to buy that is already built. It has been a pain, but I know somehow it will work itsself out. We are even considering a co-signer, so we will see!!

[SHELLY]

Yes, my hubby has a credit score of somewhere close to 780. The crazy thing is, even through the terrible market, the company he works for is not struggeling in the least! Yes, he works for a company, but he is an independant contractor for them. He pretty much just uses them for his paychecks. This company sells to mostly custom builders and even though it has definitely been slower, it is still doing wonderful!! We do own a home already, one here in gulf breeze ,and we own two rentals in Atlanta. He does not want to sell those because they make us money. I mentioned to him that we should rent something until the market gets better, but he wont have it. He says its throwing away money. He is also dead set on building our own home, as we have not found a home we like enough to buy that is already built. It has been a pain, but I know somehow it will work itsself out. We are even considering a co-signer, so we will see!!

One thing that jumps out at me is how you put so much emphasis on your "hubby's" credit score being so great...I'm sensing that maybe you're credit-challenged and that may be part of the problem.

Also, are you going to try to sell off your home in GB? Is there a mortgage on that as well? That might be another problem. Or it can be a solution if you've got any equity in that, or the rentals, that you can "harvest." (But I'm sensing that there is very little, if any, equity in any of these at the moment.)

If all is going so well, maybe you can just cut back on some of the "bells and whistles" for a couple of months and pick up a part-time job to scratch together a mombo down payment or pay the total outright--of course that doesn't help with the construction loan that will be forthcoming.

It's clear that the lenders are convinced that you're already overextended on debt...take this as a positive sign that is keeping you both from getting in over your heads as the US economy heads for a recession (which I believe we're already in).

And as for a co-signer--I wouldn't touch that with a 10-foot Pole (or a 5'8" German).

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[chrissy30004]

One thing that jumps out at me is how you put so much emphasis on your "hubby's" credit score being so great...I'm sensing that maybe you're credit-challenged and that may be part of the problem.

Also, are you going to try to sell off your home in GB? Is there a mortgage on that as well? That might be another problem. Or it can be a solution if you've got any equity in that, or the rentals, that you can "harvest." (But I'm sensing that there is very little, if any, equity in any of these at the moment.)

If all is going so well, maybe you can just cut back on some of the "bells and whistles" for a couple of months and pick up a part-time job to scratch together a mombo down payment or pay the total outright--of course that doesn't help with the construction loan that will be forthcoming.

It's clear that the lenders are convinced that you're already overextended on debt...take this as a positive sign that is keeping you both from getting in over your heads as the US economy heads for a recession (which I believe we're already in).

And as for a co-signer--I wouldn't touch that with a 10-foot Pole (or a 5'8" German).

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Someone previously asked me how my "hubbys" credit was and I answered their question. The reason I asked the question here is because I am just amazed that we are being rejected with a credit score as good as his. I put so much emphasis on that because it is what it is, and I thought an awesome credit score would atleast get us somewhere. I am not here pretending to have a wonderfull credit score, not sure why anyone would do that.
We will not try and sell our home in Gulf Breeze because we would take a loss. We moved here when the market was hot and we would never get our money back. We do have equity in two of our homes and we can take it out, and we probably will. Right now that is our game plan, to take equity out of two of our homes and put hopefully 50-60% down, leaving my father or his father to co-sign for a fairly small loan. This was not our first choice, but making an 1 1/2 hour drive one way every day is getting the best of him. If we were overextended on our debt, we would surely get out of at least one of the rental properties we have in Atlanta, unfortunately thats not our problem, its the new business issue. We have gotten a couple of private messages from people who were in similar situations, and that has helped us TREMENDOUSLY! So we will see from here.
Thanks for everyones advice
Chrissy