A couple weeks ago, one of my buyers signed all the loan documents to buy his house, and I told him I'd see him in a few hours to give him his keys after the deed recorded. Unfortunately, I was wrong.
The lender called me just two hours before we all thought the deed would record to inform me that the borrower's loan application was being audited, and this could take up to three days. My buyer's plans to move into his new home over the weekend and have out of town guests stay with him were ruined.
No one had ever heard of a quality control audit after the loan documents were signed, and that's because it had never happened before. Fannie Mae and Freddie Mac, the quasi-governmental agencies that buy bundled loans so mortgage lenders can keep on lending, have started to refuse to buy loans if there is any hint of fraud in the loan application. They already own enough foreclosed houses because of borrowers who lied about their intent to occupy the house, provided bogus employment information, or obtained inflated appraisals.
In order to convince Fannie and Freddie that the loans they are buying are good, lenders have implemented this QC audit procedure. Some lenders are comparing the tax return the borrower provided with his loan application against the tax return submitted to the IRS. Background checks on borrowers are also occurring.
My borrower's application survived the QC audit, but not without a weekend of anxiety and inconvenience.
Bottom line is that it is taking longer to get a mortgage loan processed because of this new QC audit procedure. Anyone who intends to do anything slightly fishy on their loan application should forget it.
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