Loan Application

The Loan Application is a multi-page document that describes the borrowers basic financial status. It is used by the lender and the secondary market for determining the borrowers ability to repay the debt.

The Application always contains this information:

1) Identifies the parties and their addresses;

2) States where the parties work and the income from that work;

3) List the debt of the parties; and

4) Has a balance sheet showing borrowers debt to income status (the big picture of the borrowers financial status).

Why Sign at Closing

Why sign the Loan Application at the closing table?

The application has already been signed at the time the borrowers made the initial contact with the lender. After all, the lender needs this information to process the loan.

What happens is that the initial application form becomes a working document for the lender. It is written on, changed, altered and generally looks bad by the time the loan actually closes. This looks bad for the investor who late comes along and purchases the loan on the open market.

In other words, they lender needs a "clean" copy of the form so others can read it later.

Financial Information

The financial information contained on the form will more than likely be inaccurate.

The form will list the borrowers debts. These will include other loans, credit cards and judgments. These debts are taken from a credit report and are usually inaccurate. Clients will read the list of debts and tell you they are wrong. This is normal.

Because the list of debts is taken from a credit report, they may not include the latest payments made by the borrower and will usually be a rounded number. Sometimes creditors will not report to the credit agencies in a timely manner, so the balance owed will be incorrect.

Knowing how the system works will help you explain why the numbers are different from the actual numbers.

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