The Loan Lady Blog

We recently worked on a loan in my office that was almost ready to close, when an underwriter reviewed the appraisal photos and asked about the back wall of the house.  Apparently it looked like a climbing wall.

Underwriters are now forced to scrutinize every little thing and question anything that is out of the ordinary, due to more strict guidelines.  The underwriter did not know what to make of the climbing wall.  She requested that the appraiser return to the property to investigate further and take additional photos.  This was, of course, at a cost to the borrower.

When the appraiser verified that it was indeed a two story climbing wall, the underwriter became concerned of the liability this would impose. Of course, this would be the homeowner's personal liability and have nothing to do with the house, but she could not think of any other way to object to it and she knew she should object for some reason.

Finally, she requested that the appraiser certify that the house remained sound structurally even with the climbing wall attached.  The appraiser did not want to supply that certification since she was not a contractor.

We got underwriting to agree that a letter from a licensed contractor attesting to the soundness of the structure would satisfy this loan condition and, luckily, the homeowner was someone who dealt with contractors on a regular basis.  We got the contractor's letter and that condition was cleared.

The point of the story is to once again illustrate how picky underwriters have become.  If something about a loan is outside the norm, they question it and require additional documentation and explanation.  This often comes at a cost to the borrower and drags out the loan process.

I like the fact that we are back to the days where people have to actually qualify for their financing, but sometimes the restrictions and requirements get a bit absurd.