A mortgage broker will help compile your mortgage application paperwork so that:
The whole idea is to present a thorough, well-organized package to expedite a sound credit underwriting decision for your benefit.
A good broker should make it so easy for the underwriter, that practically all of their work will be completed for them in advance – which they will very much appreciate. This includes identifying any and all risks, and the corresponding mitigants that will, ideally, allow the underwriter to quickly approve your loan request.
An incomplete, disheveled submission not only reflects poorly on the broker (who should be keenly focused on their reputation), but it will underscore the fact that you are just not ready to obtain a mortgage.
The absolute worst thing is to omit critical information from the submission. Sometimes a borrower will not disclose certain assets they own – thinking that the additional equity or liquidity are not required.
“My reported net worth is sufficient without having to disclose my other rental properties”
Lenders run ownership reports designed to uncover everything. If you sign a loan application that is obviously missing material assets, it will be an uphill battle once the error is discovered. Inadvertent omission is one thing, but intentional omission is likely to be perceived as fraud by the lender.
Imagine some guy by the name of “Greg” using your name and social security number to borrow three private loans totaling $10,000. Wouldn’t you feel violated? You would also be furious if this showed up on your credit report only 5 days before your new mortgage is scheduled to close!
The fraudster is not about to make principal and interest payments on the scam loans. So your credit score will immediately deteriorate because of late payments, which you likely won’t even know about – unless you frequently check your credit scores.
This happened to a client of mine last week. His attorney recommended that he: (i) request a fraud alert be placed on his credit report, and (ii) commence making the required monthly payments on the fraudulent loans…
Imagine making payments on a fraudulent loan – and then trying to prove later that your payments should be recouped? I don’t actually blame the lawyer – because he was simply trying to stop the fraudster, and help the borrower get a mortgage by maintaining a decent credit score. What was missing, however, was that a new conventional or FHA mortgage lender will require evidence that an act of fraud had been committed – which will include the filing of a police report. The omission of or delay in filing this report gives the appearance of “hiding” the identity theft. It is very important to demonstrate to the lender that all the right steps have been taken to address the problem as quickly as possible.