At the very end of the mortgage approval process there are two last double checks that can put borrowers at risk.
Within 5 days of the closing the lender is required to do a ‘credit refresh’. This report does not re-pull the credit report but shows the lender any activity that may have impacted the credit report since the credit was originally pulled. Find out more about the effects the credit refresh has on your credit before agreeing to it. The report is looking for newly issued credit and any indications of sloppiness with credit during the mortgage process timeline. Depending on the outcome of the credit refresh report, a full credit report may have to be pulled to see if the reported activity has impacted the borrower’s credit scores. Borrowers on the edge of either debt ratios or credit scores could lose their approval.
At this point since the loan had been approved and the commitment date has passed, if there are any issues that show up on the credit refresh the borrower is at risk of losing their deposit if the loan does not close. We work very closely with borrowers and counsel them not to make major purchases or get new credit cards (no matter how attractive the offer is) without consulting with us first. We have had to re-work loans because of a $20.00 increase in debt; this is a serious consequence and one that we all monitor.
In addition to the credit refresh we are also required to complete a ‘verbal verification of employment’ within 7 days of the closing. This is to confirm that the borrower/s remain employed as stated on the mortgage application. Ironically, we have had borrowers who have changed or left jobs and neglected to inform us… needless to say this can create some complications just days before the closing!
Both the credit refresh and the verbal verifications of employment can be the source of a delay in the closing as well. If a closing is delayed both verifications my need to be re-done (remember they must be completed within 5 and 7 days of closing). There are some employers in the area that will only complete the verbal verification on set hours and days… so timing can be a problem.
