“If you are not back at work, it’s a huge problem,” said Rick Cason, owner of Integrity Mortgage, a mortgage firm in Orlando, Fla. “Banks only deal in guaranteed income these days. It makes sense, but the guidelines are sometimes actually harsher than they need to be.”

Back in the slapdash days of easy credit, lenders were more likely to overlook the fact that a parent was out on maternity or paternity leave. But now that lenders have become more conservative, they are requiring new parents to jump through more hoops to prove their income will be enough to cover the mortgage.

So before some prospective parents start spending their Sundays at open houses, they should be prepared to deal with some complications. They may have to delay the purchase, deal with the banks’ bureaucracy (and requests for extra paperwork) or buy a home they can afford on one salary.

“Maternity leave or any other leave of absence often prevents a person from obtaining a mortgage,” said John Councilman, president of AMC Mortgage in Fallston, Md. “There are some who long for the days when such strict proof of income was not required.”

The lenders’ new attitude can be traced, in part, to new loan quality-control measures that went into effect earlier this year. Fannie Mae and Freddie Mac, the two quasi-governmental mortgage giants that buy the bulk of conventional loans from lenders, have not changed their rules for qualifying for a mortgage. But the system of checks and balances has been tightened, making lenders increasingly skittish.

Fannie, for instance, now requires lenders to recheck a borrower’s financial situation right before the loan closes. That includes calling an employer to verify employment. Before, lenders required only a statement in writing. Fannie’s new rules went into effect on June 1. Freddie’s similar rule took effect in January.

Both Fannie and Freddie have always required that borrowers have enough income to pay for the loan on closing day — and the lender must document that the income is likely to continue for at least three years.

But here is how some lenders are interpreting the guidelines for, say, a new mother receiving short-term disability insurance for a couple of months (new mothers may receive disability payments while on maternity leave, though the amount and length depend on state law and company policies).

Since the disability payments will not continue for three years, these lenders will not count it as qualifying income, brokers said, and will require the new mother to reapply for the mortgage once she returns to work. (The same logic may apply to an injured employee receiving worker’s compensation.)

That is what happened to Elizabeth Budde, a 33-year-old oncologist who lives in Kenmore, Wash. She nearly lost her mortgage after a loan officer learned she was home with her newborn.

With stellar credit and a solid job, Dr. Budde said she had been notified via e-mail that she was approved for a loan on June 15. But that note prompted an automatic, “out of the office” e-mail reply from Dr. Budde’s work account, which said she was out on maternity leave.

The next day, Dr. Budde received a second e-mail message from the lender, this time denying her loan approval. Since “maternity leave is classified as paid via short-term or temporary disability income,” the e-mail message said, it could not be used because it would not continue for three years.

The message also said the lender could not consider her regular, salaried income because she was not on the job. “I was really shocked,” Dr. Budde said. “At the time, they didn’t know how I was getting paid for my leave.”

The lender suggested that she get a co-signer — her husband is a graduate student, so his income was not enough to qualify — or reapply after she returned to work. But with the help of a representative from her real estate brokerage firm, Redfin, Dr. Budde was finally able to explain that she was receiving her full salary during her time off since she was using accumulated sick and vacation days. Once she provided a letter from her employer, proving her case, she was able to requalify.

“The reason we were buying the house was because we were having a baby,” said Dr. Budde, who is now living in the three-bedroom home, bought for $300,000. “And now we got punished for having a baby.”

Janis Smith, a spokeswoman for Fannie Mae, said there was nothing in its guidelines that would prohibit a borrower on maternity or paternity leave from qualifying for a mortgage, as long as the borrower had proof at the time of the closing that his or her income would be adequate upon returning to work. Letters from a doctor (with a return date) and the employer (stating the return date and salary) should be enough, she added.

Loans backed by the Federal Housing Administration follow a similar protocol. Brad German, a spokesman for Freddie, said its guidelines required underwriters to make sure the borrower’s income was stable and could be expected to continue for at least three years.

But, brokers said, many lenders are clearly reading those guidelines through an increasingly conservative lens. “Lenders are picking and choosing what part of the Freddie and Fannie guidelines they want to use and how they will interpret them because one bad loan could put a company out of business,” said Jeffrey J. Jaye, president of the Upfront Mortgage Brokers Association, a trade group for brokers who disclose their fees upfront.

For some lenders, that may mean approving a loan only after the borrower is back at work “There is no real assurance that the new mom will come back to work after she has the baby,” said Marc Savitt, president of the Mortgage Center, a brokerage in Martinsburg, W.Va. “It’s just prudent underwriting to go ahead and approve the loan, but she has to be back before closing.” (Lenders cannot ask a woman if she is pregnant, brokers said, but they can ask borrowers if they expect their employment or income situation to change.)

Indeed, if Fannie or Freddie learn that a loan does not meet its underwriting requirements, it can require the lender to repurchase the loan. Both companies are performing more quality control checks on the loans they buy or package and sell as securities. And, perhaps not surprisingly, the number of repurchase requests has risen sharply.

The companies said they required lenders to buy back a total of $3.1 billion in loans in the first quarter, up 64 percent from the same period last year.

“While repurchase requests have always happened in the past, it’s never been to the degree that is happening now,” said Kevin Iverson, president of the Reed Mortgage Corporation in Denver, acknowledging that the repurchasing is obviously driven by the high level of defaults. “The end result is lenders are running a bit scared. So when in doubt, they just reject the loan.”

Dave Varni, a real estate agent with McGuire Real Estate in San Francisco, recently learned about lenders’ nervousness about borrowers on leave while working with a couple expecting a baby within weeks. They wanted to make an offer on a home, but they needed both of their salaries to qualify. Ultimately, a mortgage broker told Mr. Varni that the expectant mother would not be considered “employed” when it was time to close the loan, which would probably disqualify her.

“It was eye-opening to me and my clients,” said Mr. Varni, who said the broker explained that lenders were skittish about lending to a new parent who might decide to stay home. “We are going to assess our situation and may have to shift our search to something where he could qualify by himself.”

Article Source:
http://www.nytimes.com/2010/07/20/your-money/mortgages/20mortgage.html?_r=1&ref=business

Submit any mortgage related questions to buyinginmexico@hotmail.com or leave them in the comments and the experts at MEXLend will answer them for you!

Pamela Martin del Campo Joins Mexico’s Largest Mortgage Broker to Facilitate Peso Loan Program

PUERTO VALLARTA, Mexico — September 29, 2008 – Leading Mexico mortgage broker MEXLend today announced the addition of Pamela Martin del Campo to the Puerto Vallarta office. Ms. Martin del Campo will head up the office management as well as assisting with the increasingly popular peso loan program.

Ms. Martin del Campo is a well known Vallarta native with many years of experience in closing real estate transactions. She has worked for Bill Taylor Real Estate, PVRealty and most recently for the past 15 years, Tropicasa Realty.

“The addition of Pamela to the MEXLend team is very exciting in that it further enhances our services to the Mexican community,” says David Schwendeman, President of MEXLend.

“Pamela’s experience in Mexico’s real estate market and her service to the community adds a tremendous value to our growing peso loan program,” adds Josh Rappaport, Senior Loan Officer and Director of MEXLend’s peso loan programs. “It’s important to us at MEXLend that we are able to offer a variety of programs that meet the needs of both foreign investors and Mexican nationals. Pamela’s talent helps us to more effectively communicate those programs.”

“MEXLend is strives to offer our clients the best mortgage service available in Mexico. The wealth of knowledge and expertise that she brings will strengthen our team, allowing us to maintain and improve our status in the mortgage industry,” says MEXLend CEO, Terence L Reilly.

MEXLend clients have access to the more than 20 different lenders and 300 different programs that MEXLend represents, allowing them to receive the best possible terms for their transaction.

“This has been an excellent year for purchasing property in Mexico,” says Terence L. Reilly, CEO of MEXLend. “The real estate market is still very strong in Mexico. Our current lenders have seen little impact from the plummeting American mortgage markets and our buyers are still seeing an excellent return on investment from their purchases.”

“In light of the recent collapse of mortgage giants Freddy Mac and Fannie Mae, American investors would be wise to diversify their holdings into a foreign market. By investing in Mexico now while prices are still reasonable, they are ensuring significant growth,” adds David Schwendeman, President of MEXLend. “Even buyers who are able to make cash purchases are using a mortgage program for the added security on their investment and to maintain liquidity.”

Historically, Mexico has been an all cash society. According to Softec, only three years ago mortgaged real estate comprised less than five percent of the entire market. In only three years that figure has doubled and continues to increase dramatically.

Foreclosures are almost non-existent, that coupled with high returns on stable collateral makes Mexico increasingly attractive to global lending markets. The advent of the mortgage industry has boosted the real estate market and freed up capital; one of the factors that has catapulted Mexico from number fifty-nine to number twelve in the world’s economies.

In 2007 foreign investment in Mexico increased twenty five percent. While in the United States credit lines have all but frozen, MEXLend reports that in Mexico, large commercial loans for developments and industry are still readily available for viable projects.

“Problems north of the border still have an impact on Mexico,” says Reilly, “but the old adage that ‘when the United States sneezes, Mexico catches a cold’ no longer holds true. Now when the United States sneezes, Mexico sneezes right back.”

PUERTO VALLARTA, Mexico — July 21, 2008 – Leading Mexico mortgage broker MEXLend was recently featured on a Real Wealth Radio, a broadcast program produced by Kathy Fettke, a real estate investor, certified personal coach, and host of The Real Wealth radio show in San Francisco, California.

The radio show focused on how to accumulate assets and reduce tax penalties by investing in international property, specifically in property located in Mexico where the real estate market and economy are booming. The radio show can be found at: http://www.realwealthnetwork.com/real-wealth-radio.html

During the show David Schwendeman debunks several myths about buying property in Mexico including the outdated concept that Mexican property must be cash purchases. Additionally, Schwendeman speaks about the Fideicomiso, how the land trust works and why it’s in place. He also details different lending options available to investors looking to purchase property in Mexico.

About MEXLend

MEXLend, Inc. is a Mexican mortgage brokerage that currently represents 15 different lenders offering 200 different loan options in Dollars and Pesos for buyers looking to purchase vacation or investment property throughout Mexico – including two new products specifically for Canadian citizens! In recently announced results based upon post-closing client interviews conducted by Mexico’s largest US lender, MEXLend won the #1 mark of distinction for both client satisfaction and fastest closings for the second straight cycle.  MEXLend can be reached at 322-132-7991 (in Vallarta), 917-779-9061 (while in the US or Canada) or go online at www.mexlend.com.

PUERTO VALLARTA, Mexico — July 1, 2008 – Leading Mexico mortgage broker MEXLend today announced the first dollar loan closing in Puerto Vallarta with banking partner Scotiabank. Already the principal mortgage broker for Mexico and the Puerto Vallarta area, MEXLend now offers additional lending programs for investors looking to purchase residential properties in Mexico.

“Our partnership with Scotiabank is just one more way that we can help foreign investors purchase homes in Mexico. Being the first or closing the most loans is exciting for us, but it’s only one indicator of our dedication to bringing our clients the most options available. We will continue to add more lenders and more programs to meet the needs of investors,” says Terence L. Reilly, CEO of MEXLend.

With the real estate markets foundering in the United States, many investors are turning to Mexico to make investments in primary or secondary homes. Through MEXLend, Scotiabank is offering US dollar loans on Mexico properties for US and Canadian citizens. In addition to the dollar loan program, MEXLend also offers peso lending programs for Mexican nationals and expatriates.

“By offering dual programs, both in dollars and pesos, we can help any qualified buyer with their purchase of property in Mexico. Mexico is a strong market now and predictions say that it will continue to be over the next fifteen years,” says David Schwendeman, MEXLend President. “Investors looking to diversify in Mexico real estate will find that we have a program for them, no matter what their needs are.”

“Peso loans are particularly valuable to expatriates and anyone who makes a living in Mexico,” adds Josh Rappaport, Senior Loan Officer and Director of MEXLend’s peso loan programs. “Investing in real estate now, before prices start rising is an excellent way for residents to start building wealth and protect themselves from economic downturns.”

About MEXLend

MEXLend, Inc. is a Mexican mortgage brokerage that currently represents 15 different lenders offering 200 different loan options in Dollars and Pesos for buyers looking to purchase vacation or investment property throughout Mexico – including two new products specifically for Canadian citizens! In recently announced results based upon post-closing client interviews conducted by Mexico’s largest US lender, MEXLend won the #1 mark of distinction for both client satisfaction and fastest closings for the second straight cycle.  MEXLend can be reached at 322-132-7991 (in Vallarta), 917-779-9061 (while in the US or Canada) or go online at www.mexlend.com.