So you like the stories of FB's....eh?!?!?
From the feedback I received last weekend, it seems the readers have spoken and they like to see real life scenarios of FB's. Well, I aim to please....so here we go!
Bwr NEEDS to refi. Looking at about 85% LTV with a sub 580 FICO score. They need cash-out (don't they all). $400,000 loan amount. "Stated" income. Nothing too ugly. Oh wait, I forgot to mention the multiple 90 day mortgage lates during the past 12 months. OOOOPS. The max I could do on this loan is about 70% LTV or $250,000...and the rate would be in the 9's. Somehow, I don't think this borrower can be helped....UNLESS any of you want to pool your money together and give this guy a "hard money" loan?!?!? Any takers?!?!? That's what I thought.
This next scenario is one from a few months ago. I remember this story vividly. We had a bwr that had approximately 100k equity in his house that was worth about $480,000. The bwr wanted to refi, and take some cash out. BUT, about three months before they decided to refi, they were feeling pretty "rich" with the quick 100k+ their house had "made" for them. It just so happens this was about the same time Cadillac was doing their 0% financing special. Do I really need to tell you what happened next?!?!!?
No, but I will anyway...this borrower went out and bought a new Escalade. The monthly payment was about $960 a month for 60 months. Let me tell you, buying a 60k SUV before you want to refi is not that bright. BUT wait, the story gets better. There was another new tradeline on the blog from some "custom car" business. Come on ...are you REALLY going to be caught dead in an Escalade with stock wheels?? and no TV's in the headrests?? That's right. The same month the car was bought, this new tradeline with a $17,000 balance was opened. When you add over $1200 a month in debt payments (in addition to other debt the borrower had) it REALLY kills your DTI (debt to income ratio)...and your credit score (I will do a post about credit scores another time...remind me). So, the borrowers FICO dropped, his DTI was off the charts, and he needed close to a 100% refi to "save him". IF the bwr had been patient, and thought ahead, he could have easily refi'd and THEN done all of that stuff.
I hate to say it, but I told the broker to tell the guy that I hope that Escalade is nice...because he is going to be living in it soon! The only solution for the bwr was to sell the house, and start over. I don't know what happened to that bwr. I only know that the loan officer was not able to get the borrower a loan anywhere.
And NO, they could not have gone stated income. Their FICO dropped too far, and the LTV was too high. See, I told you that not everybody can get a loan!! ;)