Here's something mortgage brokers and real estate agents should be aware of - it sure caught me by surprise!
My client applied for a refinance of his first and second mortgage. We sent out two files.
We sent the file for the first mortgage to Provident Funding. We sent the file for the second mortgage to US Bank. He applied for an equity line to replace his current equity line (his current equity line lender will not subordinate).
Both loans were initially approved. Provident Funding asked for the loan approval of the equity line.
We supplied the approval. Provident said they would not allow this equity line to go behind it because it has a pre-payment penalty!
The pre-payment is all of $350 if he closes the equity line in the first three years. I don't know of any equity line lender that does not have an early closure fee - do you?
Does anyone know if this is a Fannie/Freddie rule, or is this unique to Provident Funding?
Just another stupid reason to turn down a perfectly good loan, in my opinion.
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I think it is unique to provident
Sounds ridiculous to me.
Sarah in Nashville
If it's common sense, then it is all the reason needed to deny funding.
: )
The banks are only approving certain profile loans so they can put them all in a pretty package and sell them..
Eric J - I think you are right - I don't know of any other lender with this rule
Sarah - I agree, thanks for the comment
Mike - Like the sarcasm!
Buddy - You are right, are you the former pro wrestler? If so, I was a big fan of yours at the Cow Palace.
Phil, it seems like nowadays anything could all the sudden become a reason for denial...I have 1 loan denied in the past 4 years, but 2 loans denied just this last month... All my other loans were approved by a very very fine line, I had to provide sooo much additional documentation! Talk about discouraging...
The reality is that $350 is less than what Provident charges at closing. And the borrowers only pay the $350 IF they close out the line within 3 years. Very frustrating. Can you escalate this to the u/w manager? This is more like deferred closing costs payable only if they bail. Good luck.
Funny you should make this comment - I just left a message in hopes of talking to the underwriting manager.
Yes, the underwriter is where I would take this one. Nothing is ridiculous anymore. It is more a numbers game than ever before.
Philly,
You might be able to buy out the pre-pay for the $350, or abit more, or find a new bank that will allow the pre-pay to be bought out with optional terms. Provident can't afford to make loans they can't sell or include any suspect terms in a pool or it affects all the great pricing that they offer day to day. There have always been companies that will pick the white out of the chicken sh$t to justify some sort of power over the Broker. You're right to start with Sr. underwriting, but have some viable options to present.
Bizurke,
I haven't been able to find an equity line lender that does not have some sort of early closure fee. Nor can I find one that allows it to be bought out. Do you know of any?
Try a local credit union. Will they allow a change to their docs if the fee is pre-paid? I don't know of any of hand, but the inquiry is easier than the fight with Provident.
That's a good idea bizurke - I'll give it a whirl with a credit union!