Rejected borrowers should find out exactly why their loan application was denied, then try to remedy or work around the problem. Lenders are required to detail the cause for denial in a formal rejection letter.
In reviewing the letter, borrowers should keep in mind that the larger banks often have overlays, or tighter requirements, than the minimum qualification standards set by Fannie Mae and the Federal Housing Administration, said John Prom, thebranch manager for the Real Estate Mortgage Network. For example, the bank’s credit score cutoff might be higher than F.H.A.’s.
A borrower rejected by a big bank might be approved elsewhere. Mr. Prom recommends taking your application paperwork to an experienced loan officer for a second opinion. “Last year I picked up a couple of deals because some of the larger banks wouldn’t do 20 percent down on a two-family,” he said. “They wanted 25 percent down. We were able to do it for 20 percent.”
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