Do I disclose current mortgage pymt

sunmicroman, if you wander around here enough, you'll find that some of us are as adamant as can be about suggesting that borrowers consult with real estate attorneys. you are thoroughly correct in mentioning that there are loan officers who are clueless...that's why we suggest engaging an attorney who can navigate around the bad advice.

thanks for the post - you didn't make me cry.

I agree there are honest and informed loan officers and brokers out there. I just know there are some that aren't. Even non intentionally some may not know what they are talking about. I shared my mortgage story on this forum today. Hopefully no one will make the same mistakes or get better information than I did.

I am glad to see conscientious mortgage people on this forum. I could have saved myself a lot of mental grief had I consulted with one before my loan. I learned a lot during my mortgage process and now know what and what not to do when applying for a mortgage as well as the potential consequences of not doing the correct thing. Most of what I learned I had to obtain during the process doing my own due diligence as it wasn't offered to me.

Since there are so many clueless brokers, aren't they supposed to take classes in order to get licensed that might cover some of these issues (like what constitutes fraud and what doesn't)? I think that would prevent a lot of misinformation that is out there.

The classes you mention are required starting this year. 20 hours national education and pass test and around 4 hours each state one is licensed in and pass the state test and then continuing education every year.

Like you mentioned, we can all unknowingly not know something

and to top it all off, we've seen so many changes in the industry in the last 3 years, it's virtually impossible to stay on top of all of them. things we thought we knew a while ago, it seems we don't any longer. i think that's one reason why you might find some of us hedge our bets once in a while - there could have been a change in procedures yesterday that we didn't get the email on yet.

ongoing education is a wise move, frankly. most of us who've been around a while learned on the job from other, experienced folk; but when the real estate bubble was expanding, lots of new people saw nothing but dollars and leapt to new opportunities. not all of those inexperienced folk have been weeded out yet.

I have heard about many changes within the last 5-10 years. I know someone who has a lot of real estate experience over many years that told me that things that used to be OK years ago are now illegal. She even told me banks used to even promote some of the stuff that was done.

How long has it been required to disclose debts not listed on your credit report? Someone said there is a check box on the loan application for that, but I looked back over my application and never saw that. I honestly did not know that was required when I signed my loan application and was shocked when I found out it was (after having mentioned it to the loan professionals that I relied on and not getting a proper answer). That is why I had someone take care of the debt before closing as I did not want to do anything wrong, certainly not anything illegal.

it has always been proper to disclose all indebtedness on a loan application. when you sign an application, you are certifying to the accuracy of the information therein contained, under penalty of law. if you fail to list any obligations, you've misled your loan officer and the company with whom you're dealing.

most borrowers sign the application blindly without taking the time to read all of the fine print telling them that it's not a good thing to leave anything out.

i don't quite comprehend how you had "someone take care of the debt" before you closed, but that's another comment for another day, no doubt.

My story is on the thread entitled:

"My mortgage story and questions (long story)" - sunmicroman

I did not mislead my loan officer as I disclosed this debt to her. She told me that all that mattered was what was on my credit report and that was after numerous times and different ways of inquiring about this debt in order to make sure I was doing the right thing. Read my post (sorry, it is kind of a long story, though).

Now do you see why I am so vehement about loan officers/mortgage brokers knowing what they are doing? We as first time borrowers are relying on the professionals to tell us the correct thing as we don't know what we are doing generally.

everyone ought to be vehement about it, frankly. i didn't recognize it if you said you'd disclosed the debt.

hopefully, everyone that needs to know this will be reading this and taking it in fully - all debts need to be disclosed. can it happen that some won't get discovered if they're not on credit and they're not disclosed? sure, that's bound to happen on occasion. you never know, however, if someone can find out.

I totally agree. That's my hope about this thread too.

Most of us do not know this information going into a first home purchase. I knew that there was a debt not listed (nor ever would be) on my credit report and that is why I felt it ethical to disclose this to my mortgage person. She made me feel it did not matter so it never got disclosed to the lender.

After doing a bunch of research myself, I finally found out that it does matter. So a friend of mine paid off the debt before closing on the house. Now my Grandmother is gifting us the money to purchase it back from our friend since the friend wants to sell it and does not want to keep it. So none of our own money has ever gone towards paying this debt since after closing on the house. In fact, the debt did not exist anymore and never will.

I just wish I would have known this absolutely from the beginning. Had I worked directly with a bank or lender when I asked if I needed to disclose that debt they would have for sure told me "yes" and it would have been. Then if it mattered I could have had my Grandmother pay it off for us then. But since I used a broker, I disclosed it to them as I did not work directly with a lender. I thought that was all I was required to do as they were the professional liaison there to consult me on the proper and improper things concerning a mortgage.

If you read my thread, you'll see the struggle I went through with the entire thing. It has caused me great distress and I feel it could have been avoided.

Basically here is what I heard from both my BK attorney and Real Estate attny. My BK attny said - and I quote "Quit making payments and you will have to be out in a year". Whew - so glad I didn't pay him for an answer like that :-)

The real estate attny said that if is on my report (i.e. credit report) showing a balance then yes I need to disclose it because it is debt. Luckily for me, GMAC chalked the loan up as discharged, included in BK and has the balance showing nothing.
So, as sunmicroman said, I will go with a broker but also play it safe and pay to have an real estate attny with me during the process.

As always, I will keep all in the loop during my mortgage process (crossing fingers)!!!

Thanks again folks and take care!

i'm not certain a real estate attorney is going to be much help with the disclosure question, but i definitely advise it no matter what since you're undertaking a real estate transaction.

If it is on your credit report then it will automatically be disclosed since the lender uses the report for their calculations concerning DTI, and they always pull a current credit report. Only if it IS NOT on your credit report would you need to disclose it separately, as is in that case, they would not know about it unless you made the effort to disclose it.

I would think a RE attorney would know that any item you legally have a debt on needs to be reported to the lender. A broker is SUPPOSED to know this and advice also. The only exceptions are debts that only have a few more months left on them (I believe 10 payments or less after closing) that will not be counted. But I would still disclose that and let the lender decide.

Look, there is just too much to risk if you feel iffy about whether you should submit it or not. I was mislead and misinformed and would not advice nor want anyone to go through that. I wish I could do it all over again knowing what I know now. I have experienced a lot of mental anguish over this even if I won't be held liable for not knowing what I was doing when I signed the loan application and trusted my mortgage "professional" to give me the correct information.

Bottom line is if you don't know whether something should be disclosed, disclose it anyway. If it doesn't matter, then nothing is lost. But if it does and you knew it should have been disclosed (I did not know and that is why I asked my broker and mistakenly trusted their advice and consultation) then you could be legally held liable for any misrepresentation should the lender find out. Do a Google search for "Mortgage Fraud" and the potential consequences and that should solidify your decision on whether to disclose it.

Next time I ever go through the mortgage process again (if I ever do as this scared the daylights out of me), if I have any question on whether an item needs to be disclosed, I am erring on the side of disclosing it anyway, no matter how trivial it might seem. And I will not trust the advice of a mortgage broker, only what the lender or attorney tells me. There is just too much to loose in this process and we as buyers don't know everything so we need to be on guard with our approach to this process. Remember you are signing a document legally attesting to the information on it to be accurate and true and if it is not, unless you did not know any better (like me), could set you up for some potentially serious legal ramifications as a result. Buying a house is not worth that risk, IMHO.

i would love to know the answer to this question. i am in the same boat...have discharged bankrupcy in which my home was included...still underwater..would like to walk away and buy new house..do i have to disclose this information when applying for the new mortgage?

sun, i won't take much opposition to what you have to say, though i can't quite get with this "free ride" citation you made. i suppose what you'd be referring to could be an error on the part of a loan officer/broker that results in the borrower being responsible for providing additional information; or, of course, occasionally a denial of what was deemed to be a good loan.

truly, what we've seen in the last 3+ years is a drastic change in underwriting guidelines. what was fine is now taboo, and that's been a difficult change for everyone. lenders are often held captive by their investors, and the changes have been so frequent and so prevalent that it's hard for anyone to keep up.

i always suggest that a borrower obtain a real estate attorney. there are far too many intricacies payment, for example, as here.

As promised I was going to update you on the outcome of my hectic situation. Here is the scoop. If you filed BK you indeed must wait for the 2yrs and foreclosure 3yrs. HOWEVER! The underwriter will accept circumstances that could be out of your control such as medical bills, etc. Example would be my daughter needing surgery and it was a basis of life or death. THings like this can be overlooked - but even that you have a slim if any chance.
I am going to wait it out (welll I have to) until April 2011. Then I can legally, ethically, morally apply for a purchase.