Seller-Financed Mortgage Notes - What is it and How Does it Benefit the Seller and House Buyer?

Here are five quick tips loan originators can use to help prevent FHA mortgages from falling through during processing. Make sure the loan you are submitting makes common sense.

Stating a good case for loan approval is even more important when the FHA Total Scorecard underwriting system has referred your loan to an underwriter to make the decision. Make sure that both your cover letter and the borrower's explanation fully account for what happened to cause the borrower to have credit problems and why the underwriter should now believe that the borrower has solved the problem.

Check the CAIVRS number before processing the loan.

CAIVRS stands for Credit Alert Interactive Voice Response System. Strangely, even this fails to show up on the borrower's credit report fairly often.

Surprisingly again, many loan originators fail to think ahead strategically when compiling their loan submission package. I have seen many loans fall through at this stage because the loan officer failed to even ask the borrower if their rent had been paid on time! Remember, the rental history is not a factor if the loan is approved by automated underwriting because that history is not shown on a borrower's credit report.

The loan officer asked the borrower "How much do you make?". The loan officer submitted the loan through automated underwriting and received an approval so they told the agents and borrower to go ahead with their purchase offer only to find out after finalization of the purchase contract that 30% of the borrower's income comes from overtime pay they have only been receiving for the last year. Oops, this doesn't fit into FHA guidelines.

Loan officers frequently fail to gather complete information on all the borrower's assets once they have an automated approval. A good strategy for the mortgage originator is to gather documentation for every dime in every account the borrower has squirreled away anywhere, but submit the loan through the automated underwriting system with the fewest assets necessary to get an approval. When the loan is downgraded later on, the extra assets can often save the loan officer's reputation.

FHA Mortgage Broker Training - 5 Tips To Make Sure Your FHA Loans Get Approved And Close On Time

The seller can offer something which is called "Seller or Owner Financing". Now, please understand that seller financing does not mean the seller is actually lending money to the buyer to purchase his home.

3) Create mutually beneficial financing for the buyer and seller