real estate finance - full book (500 pgs)

If the property is sold the lender will require a

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Unformatted text preview: e repayment ability of the property; the property's capacity to generate enough income toward repaying the loan. Dynasty School (www.dynastySchool.com) 14-3 REAL ESTATE FINANCE All Pertinent Data – The loan application, then, is designed to show all pertinent data about a borrower needed by a lender in considering a loan. Perhaps the one most important item the loan officer seeks in the application and loan interview is evidence of borrower stability; stability in money management, debt payments, and employment is vital. Prohibited Discrimination – It is clear from the previous paragraph that a lender must be very discriminating in approving a loan for a certain borrower. Financial ability and reliability must be carefully evaluated. However, the Federal Equal Credit Opportunity Act (ECOA) prohibits discrimination based on age, sex, race, marital status, color, religion, or national origin. Senior citizens, young adults, and single persons must be considered in light of income adequacy, satisfactory net worth, job stability and satisfactory credit rating. Credit guidelines must be applied to each prospective borrower in the same manner. The more thorough the information provided by the borrower (e.g., addresses, telephone numbers, etc.) the faster and easier it is for the loan officer to verify and evaluate the loan application. TAKING THE LOAN APPLICATION The lender evaluates the initial information obtained on the borrower and the property. Borrower Interview – Many lenders regard a personal interview as highly desirable. Reasons for this include verification and clarification. • Application Accuracy – The loan officer has the opportunity to verify the accuracy of the information with the applicant and to make a personal judgment of the borrower's character. The loan officer may complete the loan application during the personal interview. Ability to Repay – The loan officer can verify this with the borrower. For example, is the borrower's income adequate to make payments? The loan officer may collect such things as IRS W–2 forms for the past two years, IRS 1040s, or recent pay check stubs, and may verify current status of outstanding financial obligations. • 14-4 Licensing School for Appraisal,...
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