The majority of consumers fail to realize exactly what lenders will ask them about when it comes to applying for a mortgage loan, and as a result, many borrowers are shocked about some of the things that banks will ask of them.
Take one recent incident, recently reported by the Wall Street Journal, in which one borrower was ordered to produce a copy of her divorce certificate – from two years ago! In addition, she faced a grilling over a measly $200 deposit paid into her savings account by her ex-husband, which he did in order to help her pay for raising the kids.
The problem comes down to the fact that lenders are being more cautious than ever about who gets approved for a loan these days. This has led to a tightening of lending standards across the board, with applicants having to submit to some serious scrutiny of their finances, so that banks can be sure of their ability to pay off the mortgage.
As a result, pretty much anything goes as far as lenders are concerned. They can ask questions about absolutely anything – such as cash deposits in the applicant’s bank accounts, their income, disputes about late payments, and many other seemingly trivial matters, even if they took place years before. There have even been reports of mortgage lenders asking to see college degree certificates and transcripts in order to ‘verify the applicant’s employment history’, reports the WSJ.
One particular red flag that is sure to invite a flurry of questions is any previous inquiries into a person’s credit. As such, anyone who has taken out financing or applied for a credit card is sure to get a grilling when they try to secure a mortgage.
Rhonda Porter, a Seattle-based loan officer, admitted that consumers are beginning to get a little irritated over the lender’s growing demands:
"I have customers who know they're a strong [borrower], and they're still asked for documentation. Some of them are getting their feathers ruffled a bit.”
Indeed, the questioning has got so bad for some borrowers – like those who are trying to refinance – that many just give up the ghost rather than submit themselves to what has basically become an interrogation.
And let’s face it, who can blame them?