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was close to building a house earlier this year (early March) and was talking to two lenders about construction loan. being self-employed was an extra small bu

was close to building a house earlier this year (early March) and was talking to two lenders about construction loan. being self-employed was an extra small bump for underwriting, and I asked about loss of income because the covid19 stuff was just starting to become big news. Both indicated that their underwriters would likely check up after closing - 30 or 60 days after - to check on income at that point, to see if there were problems, and that this was somewhat normal for them with self-employed folks, but wasn't anything related to c19 (which... I suspect some changes may occur to underwriting and loan processes in the aftermath of c19). They indicated this was just something that happens to 'a moderate portion of self-employed borrowers post-closing'. I'm not sure what they could actually do to you if they found your income had gone down or away post-closing. I was going to ask in our next call, but ... we're probably putting that whole project on the shelf for now.

lotsofpulp 7y ago
In certain commercial mortgages, you have to maintain a certain debt service coverage ratio (DSCR), which is operating income divided by debt service. If not maintained above a certain ratio, the lender has the right to come and take over your bank accounts and you have to submit to them to get reimbursed for expenses. Never heard of it in a residential loan though.
double0jimb0 7y ago
Self employed and re-if’d 6 months ago. The 4 brokers I worked with all said they never checked again after closing. So maybe that has changed, but I doubt it) (Also, unless you have your savings with the mortgage lender, I don’t think the bank can legally check your balances without a some sort of soft credit pull)
joezydeco 7y ago
Construction loans are a completely different animal. You're getting part of the money up-front before a single board is nailed down. It makes sense that they will monitor progress and costs.
- mgkimsal 7y ago
  monitoring after the close still struck me as a bit... odd, but not out of the realm of possibilities, I'd guess.

lotsofpulp 7y ago

In certain commercial mortgages, you have to maintain a certain debt service coverage ratio (DSCR), which is operating income divided by debt service. If not maintained above a certain ratio, the lender has the right to come and take over your bank accounts and you have to submit to them to get reimbursed for expenses. Never heard of it in a residential loan though.

double0jimb0 7y ago

Self employed and re-if’d 6 months ago. The 4 brokers I worked with all said they never checked again after closing. So maybe that has changed, but I doubt it) (Also, unless you have your savings with the mortgage lender, I don’t think the bank can legally check your balances without a some sort of soft credit pull)

joezydeco 7y ago

Construction loans are a completely different animal. You're getting part of the money up-front before a single board is nailed down. It makes sense that they will monitor progress and costs.

mgkimsal 7y ago
monitoring after the close still struck me as a bit... odd, but not out of the realm of possibilities, I'd guess.