Pregnancy and the Mortgage Application, Time to Clarify Some Miss-Information in the rain by Robert Rauf from REMN The Real Estate Mortgage Network

 There have been numerous blogs this week that discuss pregnancy and the inability to get a mortgage. The blogs make it seem as if banks are sending pregnancy test kits with the disclosure documents and after reading more than one blog, and the comments, I felt the need to set things straight.

First off this has nothing to do with pregnancy. There is nothing new here at all.  We are talking about good old fashioned mortgage guidelines that have been around for decades. We are in a Full Doc World and we need to document income and employment.

Here is how Employment and Income is verified:

• Review pay stubs, W2's etc... If the stubs mention disability or maternity leave it is a red flag

• Call the employer: "Does Jane Doe work there?" This call is often made just before closing since guidelines require a "fresh" verification. If the borrower is on a temporary leave it WILL cause a problem.

Why?It is pretty simple, mortgage guidelines require income streams to last at least 3 years to be considered for qualifications. Maternity leaves are not permanent income, they are often only for a few months and may only be a form of short term disability.

Will a loan be denied if some one is on maternity leave? No, But the closing may be postponed until the borrower returns to work. The guideline has always required a pay stub to prove the borrower has returned to work. This is not just for Maternity leave, it could be for any form of temporary disability.

This is not a discrimination item, it is purely an income issue.  It is also Mortgage Banking 101... The basics that have been in the guidelines for decades. So be careful of what you read, and the source is important as well. A lot of the uproar was from an article floating out in the media that sensationalized guidelines as if they were some new 2 headed beast, The media often takes the side of an issue that will sell things rather than inform accurately.

We keep hearing it is hard to get a mortgage. This is not really a true statement at all.  If you pay your bills on time, have a small down payment and a Job, it is pretty easy to get a loan. It is harder to get a loan now if you have crappy credit, Don't have a job, or Don't declare your income.   I laugh to myself everytime I have to say this: "You need a Job to get a mortgage" 

"AS IS" DOES NOT PRECLUDE LIABILITY FOR MISREPRESENTATIONS

In a case where the purchase contract stated that the property was being sold "as is," the sellers stated in the property disclosure form that they knew of no water intrusion or structural problems and that they had not received notice of any code violations. Two days after closing on the house, the buyer noticed significant water intrusion and foundation problems and discovered that the sellers had received notices of code violations.

Judgment was entered in favor of the buyer, as the court found the sellers knew of the problems and had made untruthful statements. Because of the sellers’ misrepresentations, the "as is" phrase did not shield them from liability. Had the sellers not filled out the property disclosure form, the result would likely have been far different.  

 The phrase, "as is," is a term of art that allows a seller to sell property without disclosing known defects. It’s a wonderful device if you’re trying to sell property that has problems, but the phrase has its limitations. You cannot make untruthful statements about the property.