Chapter 8 Qualifying the Buyer

Chapter 8 Qualifying the Buyer - Financing Residential Real...

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Unformatted text preview: Financing Residential Real Estate Lesson 8: Qualifying the Buyer Introduction In this lesson we will cover: I the underwriting process, I automated underwriting, I credit reports and credit scores, I income analysis, I net worth, I other factors in underwriting, I subprime lending, and I risk-based loan pricing. Introduction Loan underwriting involves evaluation of: 1. Loan applicants overall financial situation. I Is buyer likely to make the payments on time? 2. Value of the property (collateral). I If buyer did default, would foreclosure sale proceeds cover the debt? The Underwriting Process Underwriting involves: reviewing loan application; The Underwriting Process Underwriting involves: reviewing loan application; obtaining additional information about applicant from other sources; The Underwriting Process Underwriting involves: reviewing loan application; obtaining additional information about applicant from other sources; verifying information applicant provided; The Underwriting Process Underwriting involves: reviewing loan application; obtaining additional information about applicant from other sources; verifying information applicant provided; applying lenders qualifying standards; The Underwriting Process Underwriting involves: reviewing loan application; obtaining additional information about applicant from other sources; verifying information applicant provided; applying lenders qualifying standards; evaluating property appraisal; and The Underwriting Process Underwriting involves: reviewing loan application; obtaining additional information about applicant from other sources; verifying information applicant provided; applying lenders qualifying standards; evaluating property appraisal; and making recommendation. The Underwriting Process Qualifying standards : minimum standards used in underwriting. I Draw line between acceptable and unacceptable risks. Qualifying standards The Underwriting Process Although lenders can set their own standards, most use Fannie Mae/Freddie Mac standards for conventional loans. I FHA and VA standards must be used for FHA and VA loans. Qualifying standards The Underwriting Process Automated underwriting system (AUS) : computer program that analyzes loan applications. I Used in conjunction with traditional underwriting. I Traditional underwriting now called manual underwriting . Automated underwriting Automated Underwriting Most widely used AU systems: I Desktop Underwriter (Fannie Mae) I Loan Prospector (Freddie Mac) Either may be used to underwrite conventional, FHA, or VA loans. AU and secondary market Automated Underwriting Most widely used AU systems: I Desktop Underwriter (Fannie Mae) I Loan Prospector (Freddie Mac) Either may be used to underwrite conventional, FHA, or VA loans....
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This note was uploaded on 09/30/2011 for the course REAL 102 taught by Professor N/a during the Spring '10 term at City College of San Francisco.

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Chapter 8 Qualifying the Buyer - Financing Residential Real...

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