Hello all - I had locked a 4.5% refinance, I signed everything this Monday and today is the allotted third day waiting period end. The mortgage company just informed me that they are not going to close the refinance because the company that I work for is owned by my Brother in Law... they state that per Fannie/Freddie guidelines that since I have not held a full-time position there for 2 years+ they are canceling the loan. Is this true?

I am approaching my 1 year anniversary with that particular company so I have to wait until 2 years have passed since I came on full time and then apply for a refi? Where did this rule come from?

Thank you very much for your feedback - I cannot believe that this just cost me my refi...

Alan

I'm very sorry to hear this has happened to you, but loans get denied all the time due to job history. Your mortgage company should have gotten a 2 year job history from you and that should be supported by your last two years W-2's. Since you have only been on that job for one year, the underwriter is going to look at your history pretty close.

When you started to work for your brother in law's compay, was this a career change or are you in the same line of work as your previous job? Were there any gaps in your employment in the last two years?

The one thing in your post that I'm curious about is; did you just close the loan and waiting for the 3 days right of recession before it funded OR did you just start the loan application and lock a 4.5% rate?

Troy,

Thank you very much for the reply.

1.

Troy Topham:

Your mortgage company should have gotten a 2 year job history from you and that should be supported by your last two years W-2's. Since you have only been on that job for one year, the underwriter is going to look at your history pretty close.

They have a 7 year job history on record for me - I started working full-time for the family-owned business in May in 2008

2.

Troy Topham:

When you started to work for your brother in law's compay, was this a career change or are you in the same line of work as your previous job? Were there any gaps in your employment in the last two years?

A career change - I was working for a University at a salaried position previously and worked part-time for the family-owned business (graphic design) during that time. No - there are no gaps in employment - I have been constantly employed since I was 16 years old

3.

Troy Topham:

The one thing in your post that I'm curious about is; did you just close the loan and waiting for the 3 days right of recession before it funded OR did you just start the loan application and lock a 4.5% rate?

I am in the 3 days right of recession before it funded - I signed the papers on Monday and today (Thursday) they just said that they were denying the refi soley because I have not worked at my current employer for less than a year (only because it is owned by a relative).

You are welcome for the reply.

Wow! I'm very sorry to hear this happened to you.

I can't believe that the loan officer did not catch that the job history was in a different line of work AND I can't believe that the processor did not catch that either. I don't want to make an excuse for them, but I suppose that they thought your loan was a slam-dunk easy deal that they didn't pay enough attention to the details (or they are green and don't know many guidelines). Someone dropped the ball (more than one person I bet) BIG TIME!

As far as you closing the loan and then it gets denied... they assume they closed your loan in their name on a warehouse line BEFORE they got the clear-to-close from the underwriter.

Fannie Mae has a guideline that they want your last two year history to be in the same line of work.

The worst part of it was that they were about to complete (I do not know the technical term) the loan since this is the end of the 3 day recission period and they called my employer to verify that I was still employed.... the very last question was 'are you related' and since it was my Brother in Law speaking, he answered yes - and the mortgage company canceled everything....

So my broker says that he will work to secure a new refi with a new company... I guess he is hoping that this time they do not ask if I am related to the owners of the business that I work for.... there goes my coveted 4.5% interest rate....

It never pays to lie.... but I'll tell you, some of these rules sure make me think about it.... they make it impossible to refi.

FloridaAE:

The worst part of it was that they were about to complete (I do not know the technical term) the loan since this is the end of the 3 day recission period and they called my employer to verify that I was still employed.... the very last question was 'are you related' and since it was my Brother in Law speaking, he answered yes - and the mortgage company canceled everything....

 

So my broker says that he will work to secure a new refi with a new company... I guess he is hoping that this time they do not ask if I am related to the owners of the business that I work for.... there goes my coveted 4.5% interest rate....

It never pays to lie.... but I'll tell you, some of these rules sure make me think about it.... they make it impossible to refi.

I would be very wary of this.  Employment stability is the number one concern for underwriters these days.  And the loan officer should have asked a lot of questions with the change in employment field.  The good news is that rates, although a bit higher today, have been fairly stable at low rates the past few weeks.  All lenders will do last minute verifications of employment prior to funding.  You may be faced with a new appraisal and it might be wise to wait until the one yr anniversary arrives.

Canceled on funding day - ouch!

Don't give up on that 4.5% rate just yet - it is still out there - heck, I still have 4.5% PAR for a 25 day lock.

Give your broker another chance (if you still want to do business with them) and see if fresh eyes on your loan and a different UW will get your loan closed. Just remember that almost all lenders (including my company) will do one last VOE (verification of employment) before the loan funds. Some lender may be a little strict since you changed your career, but I believe your refinance will close... in due time.

Good luck - feel free to keep me and MND updated on the progress of your refi!

Thank you for the advice - I figure that I will let him go for it (there should not be any additional fees - the appraisal 'should' hold) since my 1st year anniversary of employment with my current employer is on May 12th... by the time that the underwriting hopefully clears that may very well already have passed.

thanks

Troy Topham:

Good luck - feel free to keep me and MND updated on the progress of your refi!

Will do - I will give this broker one more shot... if not.... I will see if anyone else can take on a loan here in FL...

Good news! Thank you for giving MND a shot for some advice!

If nothing else, the broker has learned a valuable lesson.  And hopefully, not at your expense.

Troy,

A question for you as you have a moment.

Would you say (in your professional opinion) that with the information that I have shared (even though I have a 770+ credit score - perfect payment history on all bills/mortgages etc.. 56K+ annual income and LTV at 80%) Just because I happen to work for a company that is owned by a family member and have worked there for (as of May 12th) a year as a full time employee (it is 19 months between part-time and full-time if that matters?)

So I just plain cannot make a refinance happen because of the family-owned business issue? Or have you ever seen UW's make an exception?

I really do not know where to go from here, I cannot change my employer's relationship to me! and everything else is absolutely perfect as per other desireable characteristics of a refinance applicant...

Thank you in advance...

It is quite alright to message me and I do not mind one bit.

In all honesty, I have no clue why they would deny you because you work for a family owned business. I do wonder; do you own any part of the business? Since you had a career change you might be looked at closer, but I do not see a reason for a denial. I'm pretty certain that if I were to get your last two years tax-returns in addition to all the normal docs (w-2, paystubs, copy of DL and SSN, copy of mortgage statement, bank statements) you loan should fly through UW. If you were to click on my profile, I have my contact information on there. feel free to give me a call and we can discuss this further.

Thank you again for the reply.

No, The business is owned by my Sister (different last name) and her husband - I am their Business Manager and Graphic Designer and have 0% interest in the ownership of the business. The story that I got was that because I was employed at my current position for under 2 years (11 months full-time) and the business was owned by relatives of mine so therefore it was against fannie mae/freddie mac regulations and they would not fund the loan.

I am going to give my current Broker until tomorrow to get back to me concerning whether he was able to proceed with a new loan and if not I will definitely look into contacting you - I wish to do right by my current Broker if at all possible.

There is nothing that states that you cannot work for a relative or family member in fannie/freddie guidelines. Think of the 100's+ people that could never get a loan if that were true... something in what they told you sounds fishy to me.

I got $5 that the bank ran out of money before your loan funded and that is the real reason why your refi never got funded.

May I step in and ask what type of business this is. Some lenders will prohibit loans to any persons working for a company involved in the Lending Industry i.e. Mortgage Company, Bank, appraisal office, title office, etc. owned by a family member.

If this is not the case than what happened sounds completely unreasonable.

Certainly - The company is a custom card design company - absolutely no mortgage, bank or any other financial connections apply.

FYI - I just locked @ 4.5% - 2 points. not the best deal out there I know but hopefully it is done. I close within the week... here's to hoping that I make it past funding day this time.

Thank you to everyone who responded to the thread - you all are a wonderful source of information.

Alan

Let us know if it doesn't fund.  Congrats!!