As published in Scotsman Guide's Residential Edition, December 2005.
Every loan begins with a complete application, we are told. Looking at the 1003 mortgage-loan application form, though, I wonder if it isn't time to recommend shortening it.
There are 359 boxes on the 1003. Do we really need to know all that stuff? Why are we so curious about what our customers have been doing for the past two years? Who decided we need to see two years of employment history rather than one or five?
A borrower once asked me, "Could I go back 10 years? It'll look a lot better." Why don't we just let borrowers pick their best five years?
It's no wonder our rules seem batty to the public. Lenders are not exactly centers of common sense. If you are lucky enough to take a year off work, you're smart to buy a home before you do. Nothing convulses investors more than "a broken work pattern." After all, you might repeat this behavior. Broken work patterns leave possibility for sloth. And the slothful don't get approved. Of course, we will accept any reasonable explanation. Trust me, the letter had better be good.
Credit reports are another example. In Mortgageland, it's OK to use an in-file report, but then you must have three reports merged together. It makes no difference if they are all wrong. The rule tempts you to keep merging until you get a good one. You can then throw the others away. If we allow merged credit reports, why can't we order two appraisals and merge them?
Back to the application -- do you suppose people really give much thought to listing the true value of each of their assets? This section can get you into trouble. One couple got into a heated argument about the value of their 1949 Studebaker. I had to separate them.
A fragile-looking woman once said to me, "You're not getting my Steinway."
I assured her we wouldn't think of repossessing family heirlooms.
"You touch that," she said, "and you're on the floor."
Perhaps she wasn't so fragile.
Listing assets serves no purpose. My revised application form would have one line: Other stuff: $ _____.
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