I was recently contacted by someone from New York who was looking for a renovation loan. It turns out that for over six months he was working with a bank who was painstakingly bombarding him with requests for additional information every seven days. He would get an email alert that his mortgage application has been “updated,” he would then have to wait until he got home to log on to their secure portal to find out the update, only to be disappointed, to instead find another request or question based on something he had previously uploaded.
To complicate the matter further, the mortgage request was not for him, instead, for his mother, who was the official owner on the title of the house. In April, when he initially contacted the loan officer at the bank, he was told that the request might take up to ninety days once the application was completed. He didn’t apply right after that initial conversation, because it took him some time to gather all of the necessary documentation and information. In anticipation, his mother moved in with him, because she didn’t want to be in the home during the construction. As a result, a lot of her important paperwork that they needed to go through was in storage.
They finally got the necessary documents to start the formal application this past summer, but based on my understanding, I doubt that they ever got out of the “application” stage. Their loan was never even submitted to an underwriter for review. Granted, speaking with the son, who was extremely overwhelmed by this process, was akin to playing broken-telephone because he was not familiar with much of his mother’s financial situation. She was mostly retired, and a majority of her income was coming from pensions and social security income. In the end, the bank canceled the loan request and withdrew the application because they maintained it was taking too long for him to provide the necessary materials.
I requested a conference call with the two of them so that I can truly get to the bottom of the situation. He was reluctant because his mother was only available later in the evening. That was a simple accommodation for me to meet. After hearing the entire situation and asking a series of detailed questions (which apparently no one bothered asking them up till now), I minimized the request where I would only need to see a few crucial items to make a determination. It took a few days, but he was able to get me everything I requested correctly. We went to work and analyzed the situation. By the next morning, I had my answers.
Unfortunately, his mother’s credit scores and debt-to-income ratios would not make her eligible for the loan he was seeking. I felt terrible for their situation. We were supposed to speak at 10 am the next day, but I quickly emailed him requesting that our conference call be postponed until the evening. I got on the phone and started to call a few Real Estate agents in the area that I trusted, and reached out to two appraisal companies. I needed to find out the value and condition of this house if I would have any chance of helping them.
The estimate of value that he thought their house was worth was well below the actual real market value of the home. Although no one did a formal appraisal, and no one went inside the home, I received great feedback on what some of my expert friends thought this house might appraise for. My hunch proved to be right, and I was now equipped with some new pieces of information that I would need for my call later that evening.
I dialed the number - and I’m not even sure the phone actually “rang” before I heard the mother’s voice saying, “Sir, please tell me you can get this construction loan for us!?” My reply was, “Unfortunately, I can not do that for you, but…” I interjected her pleas because there was “a twist.” They were pursuing a construction loan because they were looking to do work on their home, but those loans are more expensive, challenging and restrictive. My full reply was, “I can’t do that for you, but - I can get you a cheaper, faster and easier conventional loan.” By taking a little initiative, even without the expectation of any guarantees, I was able to offer them a much better alternative that was more feasible for them to get.
A shout out and Happy Birthday to Ari Fuchs, Bruce Kessler, and Chaviva Weinblut. Happy belated birthday to Gabriella Davidovitch.
By Shmuel Shayowitz
Shmuel Shayowitz (NMLS#19871) is President and Chief Lending Officer at Approved Funding, a privately held local mortgage banker and direct lender. Approved Funding is a mortgage company offering competitive interest rates as well as specialty niche programs on all types of Residential and Commercial properties. Shmuel has over 23 years of industry experience including licenses and certifications as certified mortgage underwriter, residential review appraiser, licensed real estate agent, and direct FHA specialized underwriter. He can be reached via email at [email protected]