Sunday, January 13, 2013

employment changed before closing...what to do?

My refinance went through in November, but I lost my job in October. The refinance closed, but as a routine post-close audit they now want proof of income, either where I am working now or where I was working between October and November, in their words " In order to make the loan compliant with standard underwriting guidelines we need to obtain her current Employer details and supporting income documents (paystubs) for borrower". I've worked one 2 week job and now have another small part time job, and am still looking for full-time employment. What does this mean? Can they change my refinance, even though I've started payments? Can I be penalized, and what should I say or give to them?  I'm worried this will affect my loan. Thank you so much, I sure hope to hear from you!!


Hi, S:   At the time of closing the loan application would have been presented for you to confirm the accuracy of the information.  Did you disclose to anyone at the closing or prior to closing that your employment had changed?  If you did and the person you told did not stop the transaction, then they may have put you in a bad position.  Contact your mortgage lender and explain what happened and whether you did tell someone or you didn't understand that you should have done so. Be honest and hope for the best.  Good luck.


I want to add some thoughts for readers who may be facing a similar situation.  Failure to notify your mortgage lender that you have had a change to your financial profile - including but not limited to income or liabilities - is MORTGAGE FRAUD.  Yes, that's right.  You have to take seriously that the mortgage lender is agreeing to loan this money to you based upon the financial status you disclosed and they verified.  If your employment changes before you close and your lender does not discover this new information, you have an obligation to tell them.  Yes, this will stop your closing but you do not have the right to take the lender's money under false circumstances.

Unfortunately we do have loan personnel or real estate agents or settlement officers who may suggest to the consumer that they NOT tell the mortgage lender. These folks don't want to risk losing the income on the transaction but what they are doing is colluding to defraud the mortgage lender. If their participation in such a fraud is discovered, they too may be subjected to criminal charges or face some other penalty which may impact their employment or licensure.

It is entirely possible that S will be subjected to a demand for full payment of the mortgage balance.  It is even possible that S may be subjected to criminal charges.  That's very scary but depending on the loan program and the lender's policy for circumstances such as this, the remedy, harsh or less severe, is not going to be a joy for S.

Each consumer must take seriously their legal obligations when disclosing information to the mortgage lender.  Don't fool around with mortgage fraud.

1 comment:

Cumberland said...

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