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14-2 Licensing School for Appraisal, CPA, Contractors, Insurance, Real Estate, Notary, Nurse, Food Handlers, Tax and Securities 14: THE LOAN PROCESSING
evaluating the borrower's earning capacity, as many components make up income probability. If a borrower is self–employed, profit and loss statements, balance sheets and copy of borrower's signed federal income tax returns for the two years immediately prior to the borrower's loan application are usually requested as verification of income. Dependents – Number of dependents being supported by the borrower, and for how long, is a consideration. Living Expenses – The lender considers the amount of the applicant's income remaining to pay on the loan, taxes, and insurance, after deducting living expenses. Current mortgage payments or current rent payments are relevant. Relationship with the Lender – If a borrower has a previous or existing relationship with the lender, the lender may evaluate that relationship when considering the borrower's latest application, subject to certain non– discrimination laws. References and Credit Reports – The lender will check credit and personal references of the borrower. Telephone checks and the use of credit reporting agencies are common. The borrower should bring any delinquencies to the attention of the lender, and the reason they occurred, rather than letting the lender discover them later. Property Information – The property financed is the collateral for the loan. Information is required by the lender to determine its value as security. (See previous chapter, “Qualifying the Property.”) Identification – Specific location of the property, normally the legal description. Preliminary Title Information – Any claims, encumbrances, liens, etc. Improvements – Description of land and improvements, including any work done in the past 90 days that might be subject to a mechanics lien. Economic Data – Taxes, zoning, assessments, price and terms, date of construction, and income data if an income property. Rental Statement (for Income Property) – Th...
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- Spring '10