Finanacing Subjectiveness

Hello all…this seems like an easy question to answer. When applying for financing I understand there are OBJECTIVE requirements that need to be met (income, LtV, etc) my question is…how much SUBJECTIVENESS is allowed in approving a loan? I guess this is to suggest that maybe lender can actually use judgement?

There are minimum credit score requirments but as long as they are met the score is subjective to the lender’s automated underwriting engine.

Can never go over max ltvs.

Debt to income ratio is subjective if using the lender’s automated underwriting engines.

Total of assets is subjective if using the lender’s automated underwriting engines so long as the minimum reserve requirement is met. That is not negotiable.

Employment history is not subjective, minimum standards apply.

Income and Asset documentation is determined by the automated underwriting engine. These are no subjective.

Instead of using the lender’s automated underwriting engine sometimes it’s best to manually submit a loan. When this happens there are specific score, dti, reserves, and documentation requirements which are not subjective.

Correct me if i’m wrong…the automated underwriting engine is comparable to punching data into a computer?

If so…i would think that anything that goes in to the engine would be rather objective.

So of all the requirements…debt to income is the only thing subjective?

DTI is not subjective. Income and assets are the only thing that are NOT subjective. The appraisal is subjective because the value of a property can change based on who does the appraisal. Title is subjective based on how the liens are recorded. Nowadays it seems as if everything is subjective though because an UW can just condition you to death if they don’t like the loan file.

Can you explain about the title and how it impacts a lender’s decision?

A title company (or attorney) issue a title commitment showing any liens against the property. This commitment insures that the properties has no liens and assures the mortgage company would have first lien position.

It is required to fund the loan.

The lender typically requires a 12-24 month chain of title to close the loan. The UW reviews the chain to make sure there is nothing out of the ordinary in the most recent history.