A few months ago, I was looking to put a bid on a condo in a building w/ a very high sponsor concentration; the Seller's Agent told me only one lender could finance in the building & after doing a whole lot of independent research & not finding another lender willing to touch it with 10' pole, I decided to go with the lender recommended by the Seller's Agent. That lender turned out to be... [more]
A few months ago, I was looking to put a bid on a condo in a building w/ a very high sponsor concentration; the Seller's Agent told me only one lender could finance in the building & after doing a whole lot of independent research & not finding another lender willing to touch it with 10' pole, I decided to go with the lender recommended by the Seller's Agent. That lender turned out to be completely incompetent & meanwhile I lost the apartment to an all cash buyer, but during the process ran my credit. Currently, I have a commitment from another lender for a co-op where I will be going into contract soon & one of the additional conditions I must satisfy prior to closing is, "provide a letter of explanation" for that inquiry?
Is this normal? How much detail is one expected to provide?
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Response by huntersburg
over 13 years ago
Posts: 11329
Member since: Nov 2010
Why not just provide the detail - like you just did about but without the commentary about the supposed competence of the lender - instead of making a federal case of it?
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Response by sammy300
over 13 years ago
Posts: 208
Member since: Mar 2012
@ hutersburg: Not making a federal case - just want to make sure i don't lose my financing & word it correctly...
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Response by sammy300
over 13 years ago
Posts: 208
Member since: Mar 2012
i.e. if in fact it is needed or is it just a ploy to disqualify?
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Response by huntersburg
over 13 years ago
Posts: 11329
Member since: Nov 2010
>Not making a federal case
>is it just a ploy to disqualify
They are coming to get you
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Response by rb345
over 13 years ago
Posts: 1273
Member since: Jun 2009
sounds imbecilic. Many inquiries are unsolicited or undertaken without
subject's knowledge or consent. But in the worst case it could cause lender
not to fund you, so be very careful/
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Response by huntersburg
over 13 years ago
Posts: 11329
Member since: Nov 2010
>Many inquiries are unsolicited or undertaken without
subject's knowledge or consent.
Not true- that's not legal.
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Response by streetsmart
over 13 years ago
Posts: 883
Member since: Apr 2009
This is standard. The bank just wants to be certain that you are not borrowing any additional momey that they are not aware of, since that would affect your dti ( debt to income ratio). Just be sure to state you have not committed yourself to borrowing any additional monies.
Ellen's got it -- it's not that complicated. You just write the letter, be clear that no debt has resulted from the inquiries, sign it, and send it in. End of story. Not even as much detail as you posted above -- nobody cares who the lender was or why you applied with them, just that you don't have a loan as a result.
The nightmare scenario for your current lender is that they see your credit report, which shows your existing monthly debt load is $xxx, and they make their loan before they find out that you've simultaneously taken out a loan which adds $yyy to your monthly payments, plus the mortgage they just gave you -- and they wouldn't have given you the mortgage if they'd known about the $yyy. So they ask about the inquiries because those show up immediately on the report; if you actually received credit as a result of the inquiry, that might not show up for a month or two.
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Response by sammy300
over 13 years ago
Posts: 208
Member since: Mar 2012
Thanks, Ellen.
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Response by mucuk
over 13 years ago
Posts: 79
Member since: Mar 2009
Your mortgage guy ought to have a standard-form letter of about one or two sentences. "We were shopping for a mortgage. We did not end up applying for credit from this lender." This is the least of your worries...
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Response by sammy300
over 13 years ago
Posts: 208
Member since: Mar 2012
mucuk-thanks!
so what are the items i should really worry about? noy being sarcastic, but it is a "real" question from a first-time homebuyer...
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Response by Bernie123
over 13 years ago
Posts: 281
Member since: Apr 2009
RB365: there are two kinds of inquires: "hard inquires" occur when you are looking for credit & indeed do affect one's credit score & profile. The second type are called "soft" or "promotional" inquiries. These occur when banks pre-approve you for a credit card and cannot be seen by other issuers and have no impact at all on your credit score. HBurg correctly points out only YOU can generate a hard inquiry.
Sammy3000 - this practice is completely standard in my experiece... the lender wants to be sure you have not you recently taken on more debt. So for example a new lease for $100K BMW would be a big red flag for the underwriters. I would also not open any new credit cards prior to closing.
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Response by jimmcp
over 13 years ago
Posts: 58
Member since: Jul 2009
The reason for this is to state to the investor that you aren't taking on any new debt that might put the debt to income ratio over the limits outlined in the lender guidelines. If you are on the fence for qualifying for a loan and they see a Mercedes inquiry or something similar, they want it in writing that you havent bought a new car in the process.
Every lender is going to ask you for this since it is something that is required by FNMA, which means everyone else is asking for it.
Jim McPartland
Sales Manager/ PrimeLending
jmcpartland@primelending.com
212.257.7549
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Response by tcurranmortgage
over 13 years ago
Posts: 52
Member since: Jul 2012
Sammy,
An "Inquiry Letter" is a standard request from your Lender when applying for a mortgage loan. We need to verify that no new credit has been established as a result of the inquiry---credit that may not yet appear on your credit report. All debt must be disclosed when applying for a mortgage loan.
By way of an example: if you've got an inquiry with Nissan Auto Finance a week before you applied for your mortgage, your Lender wants to verify you didn't lease a brand new car. Because the inquiry is the week before your Lender pulled a credit report the newly opened auto loan won't yet be reported as a debt on the credit report. But you must disclose the monthly payment and terms to your Lender at application. The Inquiry letter is a way of double-checking that all debt has been disclosed.
As for inquiries that appear from your Lender, Mortgage Broker or other Mortgage Lenders/Mortgage Brokers: these also need to be addressed in the same way. You explain the purpose of the Inquiry ("Shopping for a mortgage prequalification.") and the fact no new debt was established.
I was as confused about these Inquiry Letters back in 1989 when I started in the mortgage business as you are today, Sammy. It's a standard procedure; your Loan Officer should have explained the purpose to you when it was requested.
Trevor Curran
NMLS #40140
Mobile: 516-582-9181
Office: 516-829-2900
Fax: 516-829-2944
PowerHouse Solutions, Inc.
185 Great Neck Rd, Suite 240
Great Neck NY 11021
Licensed Mortgage Banker – NYS Dept. of Financial Services
NMLS#3528
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Why not just provide the detail - like you just did about but without the commentary about the supposed competence of the lender - instead of making a federal case of it?
@ hutersburg: Not making a federal case - just want to make sure i don't lose my financing & word it correctly...
i.e. if in fact it is needed or is it just a ploy to disqualify?
>Not making a federal case
>is it just a ploy to disqualify
They are coming to get you
sounds imbecilic. Many inquiries are unsolicited or undertaken without
subject's knowledge or consent. But in the worst case it could cause lender
not to fund you, so be very careful/
>Many inquiries are unsolicited or undertaken without
subject's knowledge or consent.
Not true- that's not legal.
This is standard. The bank just wants to be certain that you are not borrowing any additional momey that they are not aware of, since that would affect your dti ( debt to income ratio). Just be sure to state you have not committed yourself to borrowing any additional monies.
Ellen Silverman
www.esfunding.instantlender.com
Ellen's got it -- it's not that complicated. You just write the letter, be clear that no debt has resulted from the inquiries, sign it, and send it in. End of story. Not even as much detail as you posted above -- nobody cares who the lender was or why you applied with them, just that you don't have a loan as a result.
The nightmare scenario for your current lender is that they see your credit report, which shows your existing monthly debt load is $xxx, and they make their loan before they find out that you've simultaneously taken out a loan which adds $yyy to your monthly payments, plus the mortgage they just gave you -- and they wouldn't have given you the mortgage if they'd known about the $yyy. So they ask about the inquiries because those show up immediately on the report; if you actually received credit as a result of the inquiry, that might not show up for a month or two.
Thanks, Ellen.
Your mortgage guy ought to have a standard-form letter of about one or two sentences. "We were shopping for a mortgage. We did not end up applying for credit from this lender." This is the least of your worries...
mucuk-thanks!
so what are the items i should really worry about? noy being sarcastic, but it is a "real" question from a first-time homebuyer...
RB365: there are two kinds of inquires: "hard inquires" occur when you are looking for credit & indeed do affect one's credit score & profile. The second type are called "soft" or "promotional" inquiries. These occur when banks pre-approve you for a credit card and cannot be seen by other issuers and have no impact at all on your credit score. HBurg correctly points out only YOU can generate a hard inquiry.
Sammy3000 - this practice is completely standard in my experiece... the lender wants to be sure you have not you recently taken on more debt. So for example a new lease for $100K BMW would be a big red flag for the underwriters. I would also not open any new credit cards prior to closing.
The reason for this is to state to the investor that you aren't taking on any new debt that might put the debt to income ratio over the limits outlined in the lender guidelines. If you are on the fence for qualifying for a loan and they see a Mercedes inquiry or something similar, they want it in writing that you havent bought a new car in the process.
Every lender is going to ask you for this since it is something that is required by FNMA, which means everyone else is asking for it.
Jim McPartland
Sales Manager/ PrimeLending
jmcpartland@primelending.com
212.257.7549
Sammy,
An "Inquiry Letter" is a standard request from your Lender when applying for a mortgage loan. We need to verify that no new credit has been established as a result of the inquiry---credit that may not yet appear on your credit report. All debt must be disclosed when applying for a mortgage loan.
By way of an example: if you've got an inquiry with Nissan Auto Finance a week before you applied for your mortgage, your Lender wants to verify you didn't lease a brand new car. Because the inquiry is the week before your Lender pulled a credit report the newly opened auto loan won't yet be reported as a debt on the credit report. But you must disclose the monthly payment and terms to your Lender at application. The Inquiry letter is a way of double-checking that all debt has been disclosed.
As for inquiries that appear from your Lender, Mortgage Broker or other Mortgage Lenders/Mortgage Brokers: these also need to be addressed in the same way. You explain the purpose of the Inquiry ("Shopping for a mortgage prequalification.") and the fact no new debt was established.
I was as confused about these Inquiry Letters back in 1989 when I started in the mortgage business as you are today, Sammy. It's a standard procedure; your Loan Officer should have explained the purpose to you when it was requested.
Trevor Curran
NMLS #40140
Mobile: 516-582-9181
Office: 516-829-2900
Fax: 516-829-2944
PowerHouse Solutions, Inc.
185 Great Neck Rd, Suite 240
Great Neck NY 11021
Licensed Mortgage Banker – NYS Dept. of Financial Services
NMLS#3528