This may be a trend that will expand to the entire mortgage industry: "grossing-up" of retirement benefits no longer allowed!
For years, FannieMae has "allowed" loan originators to "gross-up" Social Security income when filling out 1003's for mortgage applications. And the manufactured home lenders, who finance MH's in parks, have always followed that same guideline. But not any more!
Starting with a major MH lender based in Jacksonville, FL, the new policy is catching on with other banks, and the latest to adopt this guideline is our industry's other major lender headquartered in San Diego.
What is "grossing up"? For example, if a Social Security recipient receives $1,000 per month in SS benefits, then, for the purpose of qualifying the applicant, the loan officer "grosses-up" their net income an extra 25%. Therefore, their net income of $1,000 becomes a "gross" income of $1,250.
FannieMae has allowed this so to create an "even playing field" for loan applicants. Lenders look at the applicant's gross income, not net, when it comes to wage earners and people on salaries. So grossing up income makes the underwriting process a fairer process. "Grossing-up" gives the loan applicant a hypothetical payraise. It's always been allowed by federal regulation, so therefore, is not loan fraud.
Unfortunately, senior citizens, and all receipients of SSI or SDI income, will be at a disadvantage when applying for loans for manufactured homes in parks. This new policy will make it harder to qualify seniors, and that's not good for our industry, in my opinion.
One of the MH lenders is also a MAJOR Fannie/Freddie lender of all types of real estate. It's unclear if this new policy extends to real property loans. My guess is that it will.
Other MAJOR changes coming to the mobile home finance industry daily! Good things, and not so good things.
Stay tuned to my blog.....
Call any time for advice with all phases of manufactured home finance.
Dave Shanklin
800-401-3372, or 916-962-7128
Info@MobileHomeDollars.com
www.MobileBrokers.net
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