Handy Dandy Checklist for Your New Divorce Clients
Thanks to the urging of the awesome Jennifer Richardson and Stuart Brown (of http://www.richardsonbrownlaw.com/) I have a handy checklist for you to give your clients.
This list is rare and only my “partners” (those of you who read my stuff) will have such a list. From time to time, I have offered recommendations for new divorce clients to help them prepare for their upcoming mortgage finance needs. But, this checklist will make these recommendations accessible for everyone on one list.
It’s really quite simple – anticipate what clients/borrowers will need in order for them to qualify for financing. First, here’s the principle behind what I am doing here: while you must work in the (legal) world of orders, agreements and judgments, I work in the world of documentation. Sure, my borrowers are subject to the legal orders, etc. But very often, documentation is superior to an order or agreement. Here’s an example of what I mean; and, it’s the first item on the list.
Think of spousal support. The legal world of family law and divorce settlements will usually think in terms of an order/agreement (temporary, MSA, ISA or final divorce) and support will begin on a particular date according to that order/agreement. But, in order for support to be considered qualifying income for a borrower, it needs to be documented as well as ordered. Here’s the rule: We must document that the support has been received for at least the previous six months and verify that it will continue for at least 3 years. Only a legal order or agreement can verify continuance. It’s one of the easiest things to underwrite – it’s written in plain English in a decree or agreement/order. A decree tells the mortgage underwriter the exact month support will discontinue. But, notice the front end of the support – only documentation is required. That means support can be paid on a good-faith basis only, no orders or written agreements required. [The one exception is Freddie Mac’s guidelines that, in fact, do require that the support be ordered in some legal fashion; however, we underwrite and document almost always to Fannie Mae standards in conventional loans and Freddie Mac is reserved for other nuances in borrowers’ needs. Freddie is the smaller of the mortgage “giants.”]
This is magical!
Now, the list…and the list within the list.
Thanks for reading,