Income: What Happens If You Have Job Loss After Mortgage Closing

Job Loss After Mortgage Closing

Gustan Cho Associates

The mortgage meltdown and overhaul of the mortgage industry has totally revamped mortgage lending guidelines on residential mortgage loans. Days of no doc and stated income mortgage loans are no longer available and have been extinct for years and does not seem that it will ever come back.  Sub-prime mortgage lenders all went out of business.  The rules and regulations on residential mortgage lending has changed so much that even hard money lenders need to abide by RESPA  rules and laws governing residential mortgage lending.  The government overly created new regulations so it can avoid any more mortgage meltdown and to minimize foreclosures.  The whole real estate and mortgage lending industry came to an abrupt halt due to the real estate and mortgage collapse.  Real estate values came tumbling down where in some part of the country, values plummeted by 50% or more.  Fortunately, after implementing new mortgage lending guidelines and creating lax qualification requirements for home buyers who had prior bankruptcy and foreclosure, real estate values made a comeback, especially in Illinois, Florida, California, Washington, Indiana, and Wisconsin.  Many areas of California such as Los Angeles, San Diego, Irvine, San Francisco, San Jose, Sacramento, Malibu, Pasadena, Burbank, Palm Springs, Modesto, La Jolla, Lake Tahoe, Oakland, Santa Monica, Santa Barbara, Redlands, Covina, Santa Cruz, Riverside, and many other parts of California have almost recovered fully from the real estate market crash.  The most important factor in qualifying for a mortgage loan is income. If you have job loss after mortgage closing, contact your mortgage lender immediately.

You Can Have Bad Credit But If You Have Income, You Will Qualify For Mortgage: The Reverse Is Not True

You can have crappy credit but if you have income and that income is documented and the likelihood to continue for the next three years can be verified by a written verification of employment by the current employer, then you will qualify for a mortgage loan eventually.  However, if you have perfect credit but do not have income, then you cannot be qualified for a mortgage loan until your have documented income.  Mortgage lenders are paranoid about the stability of every borrower’s ability to repay their mortgage payments timely after closing.  They want to make sure that the mortgage loan borrower’s job stability is strong and that they are able to remain employed.  Without income, borrowers cannot pay their mortgage payments which will cause the home to go into foreclosure.  Mortgage lenders are not real estate investors and they want to avoid foreclosure proceedings at all levels and will work with homeowners who had a job loss or are having a tough time financially.

Verification Of Employment

There is a reason why mortgage lenders want to see a two year employment history, two years tax returns, two years W-2s, most recent 30 days paycheck stubs, and a verification of employment.  The mortgage lender is trying to determine that you have a solid job and your income will be secure for the next three years and thereafter so your mortgage loan does not go into default and into foreclosure.

Is Your Job Stable?

Your mortgage lender can determine that your job will be stable and all of your employment verification can pass with flying colors. The lender’s worst nightmare will be if you had a job loss after mortgage closing. However, you know better than any mortgage lender doing a verification of employment on the stability of your income.  If you feel that your job is not stable or are planning on making a mover or your employer is planning on selling their business but has not told the mortgage lender that so your employer can help you qualify for a mortgage, maybe you may want to wait until you close on your home.  Buying a new home comes with a great deal of responsibility and you need to make sure that your job and income will be stable and you are able to afford your housing payments as well as your other expenses.

Notify Your Mortgage Lender If You Have Job Loss After Mortgage Closing

If you had a job loss after closing on your mortgage loan, contact your mortgage lender immediately.  Do not try to make your mortgage payments if you do not know that you can make your mortgage payments in full and are not sure that you can come up with the money and find out at the last minute you cannot make it.  Notify your mortgage lender’s servicing department immediately and tell them that you have been current on your mortgage loan but you just lost your job.  Your mortgage lender will work with you if you notify them immediately after your job loss.  If you do not notify your mortgage lender of your job loss and become delinquent and miss your mortgage payment and then notify them, they will be less likely to work with you.  However, if you have been timely and your sustained a job loss, your mortgage lender will ask you to provide and complete a personal financial statement and provide them with proof of termination and may work in giving you a forbearance period until you regain full time employment.  There are many options that your mortgage lender may give you.  Loan modification is one of them in the event if you get a job where the income is substantially less than what you used to make.  Loan modifications will reduce your monthly payments that you need to make to your mortgage lender where the mortgage lender may reduce your interest rate and/or extend the life of the loan.  If you regain employment and you are making the same amount you were making from the employer that terminated you, your mortgage lender may do a mortgage loan workout where they may roll the deficit of your delinquent mortgage payments to the back of the mortgage loan and spread out the escrow shortage over 60 months.  Your monthly mortgage payments may increase slightly due to making the escrow shortage payment but not by much.  Mortgage lenders do not want to foreclose on your property and will do everything possible to work with you in the event of a job loss.

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The information contained on Gustan Cho Associates website is for informational purposes only and is not an advertisement for products offered by The Gustan Cho Team @ Gustan Cho Associates or its affiliates. The views and opinions expressed herein are those of the author and/or guest writers of Gustan Cho Associates Mortgage & Real Estate Information Resource Center website and do not reflect the policy of Gustan Cho Associates Lenders Network, its officers, subsidiaries, parent, or affiliates.

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