Can the lender demand full payment on your property if you work a full-time job now and intend to retire in the near future and the retirement is discovered later?
Or, let’s say you expect a job change but don’t know exactly when this will occur. Just how long is the information stated on your home-loan application considered valid?.
These and related queries were recently brought up by a long-time charter fisherman whose lender required the signing of a “re-verification form” at the closing of a small duplex. He was particularly worried because, at the time of application, he had already provided financial details about stocks, bank accounts, and income. In the next eight months, he intends to sell his boat, work part-time in an office, and retire. He is single.
A reverification form typically does not accompany the closing papers, even though lenders occasionally disclose during the application process that employment, assets, and credit may be reviewed again close to or on the closing date for quality control purposes.
The fisherman was also perplexed when the mortgage broker informed him that if their lender chose to sell the loan to a different lender or investor on the secondary market, they would need to reevaluate his assets and credit. According to the broker, the borrower’s ability to repay the loan would be required to be disclosed to the new lender or investor.
About 10 to 20 percent of a lender’s loans undergo post-closing verifications to ensure that the lender is fulfilling quality standards and isn’t offering loans of lower quality in the secondary market.
However, it is impossible to ensure the borrower’s job or any particular assets for a long time to come, let alone the duration of the loan. Lenders would undoubtedly support the practice if it were possible because they would be funding loans that are essentially risk-free.
Before funding a loan, lenders check employment, bank account, and credit histories to see if the borrower has the required down payment and can afford the monthly payments at the time of loan origination. However, there is no way of anticipating the main reasons borrowers fail to make payments. Some renters leave without notice, yet owners try to find a way to make mortgage obligations. Owners who rely solely on rental income with no emergency cushion can find themselves in a hole quickly.
Deliberately falsifying statements on a home-loan application can result in stiff penalties and fines. Lying on a Federal Housing Administration loan application is a federal offense.
To find out if there was any fraud or factual misrepresentation at the time the loan was made, verifications are carried out. Postclosing verifications, according to lenders, are carried out to guarantee the integrity of the business that originated the loan rather than to look into the borrower further.
An investor in the secondary mortgage market expects to receive what they pay for when a loan is sold to them. The loan is judged eligible for sale in the secondary market if the borrower satisfies clear income, credit, and down payment requirements, assuring the investor of a high-quality loan.
In order to avoid having to buy back loans that were sold to investors in the event that errors in the original documentation are discovered, lenders also want to ensure that their quality-control procedure complies with all applicable regulations.
Credit has become tighter and lenders are spending more time verifying a borrower’s assets, especially for investors. It’s extremely rare, however, to see any postclosing questions directed toward the borrower. Usually, loan documents specify whether or not any of these types of inquiries are permitted after the loan is closed. Typically, if the loan payments are made, no questions are going to be asked.
In the instance mentioned here, the fisherman was worried that any lender or investor looking to shop the secondary market would be able to access his credit history and asset details. He had significant revenue streams and was reluctant to again surrender personal information.
It turned out that not all needed assets were verified at the time of application. The mortgage broker’s supervisor intervened to clarify the form and the missing information.
State the truth on all loan documents. Lenders expect future job changes but their verifications are focused on today. The Spokesman-Review Newspaper.
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Congratulations on closing on your new home! It’s an exciting time, but it’s important to remember that your journey isn’t over yet. Lenders often follow up after closing to ensure everything is in order and to answer any questions you may have.
What to Expect After Closing
After closing, you can expect your lender to send you a closing disclosure statement, which summarizes the terms of your loan. You should also receive a copy of your mortgage note, which is the legal document that outlines your repayment obligations.
In some cases your lender may also send you a post-closing verification form. This form asks for information about your income, employment, and assets. The purpose of this form is to ensure that the information you provided on your loan application was accurate.
Why Lenders Follow Up After Closing
There are a few reasons why lenders follow up after closing First, they want to make sure that you understand the terms of your loan and that you are able to make your payments Second, they want to ensure that the information you provided on your loan application was accurate. Finally, they want to build a relationship with you so that they can be a resource for you in the future.
What to Do If You Receive a Post-Closing Verification Form
If you receive a post-closing verification form from your lender it’s important to fill it out and return it as soon as possible. The form may ask for information about your income employment, and assets. Be sure to provide accurate and complete information.
Do not hesitate to get in touch with your lender if you have any questions regarding the form. They will be pleased to assist you with filling it out and respond to any inquiries you might have.
Tips for Staying on Top of Your Mortgage Payments
Once you’ve closed on your new home, it’s important to stay on top of your mortgage payments. Here are a few tips:
- Set up automatic payments. This will ensure that your payments are made on time, even if you forget.
- Create a budget. This will help you track your income and expenses and make sure that you can afford your mortgage payments.
- Talk to your lender if you’re having trouble making your payments. They may be able to work with you to create a payment plan that fits your budget.
Frequently Asked Questions
Q: How long after closing will my lender follow up?
A: Your lender will typically follow up within a few weeks of closing.
Q: What should I do if I receive a post-closing verification form?
A: Fill it out and return it to your lender as soon as possible.
Q: What happens if I can’t make my mortgage payments?
A: Talk to your lender as soon as possible. Maybe they can collaborate with you to design a payment schedule that works with your budget.
Additional Resources
- Rocket Mortgage: What Not to Do After Closing on a House
- The Spokesman-Review: Tom Kelly: Can your lender challenge loan data after closing
After closing, lenders follow up to make sure everything is in order and to address any concerns you may have. It’s critical to make your mortgage payments on time, and to let your lender know if you’re experiencing any difficulties.
You can ensure a seamless and prosperous journey towards homeownership by adhering to these tips.
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