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B of A last minute says no to my re-fi ( after 3months)

I am in final stages with Bof A to close a refi. Now they are saying that DTI is to high because They are not considering a annuity payment that started 3/10. With that it would put me at 45% DTI. Without it they are saying its 52. Loan to value is good! Credit score mid 700's Citibank even subordinated the equity line. What gives?
  • June 12 2010 - San Jose
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Answers (4)

If they won't come to their senses, then move forward with a different lender. Rates seem to still be good. I have a buyer that has had a similar issue--the mortgage broker (not me, I don't do loans) failed to put in a cover letter explaining an item and the bank rejected based on that item. The buyer is resubmitting to another lender but including a cover letter on the item from moment one and all seems to be well. If a refi makes sense for you...do not give up.  Try with another lender. 
  • June 12 2010
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IMO typical of a retail bank at the moment. Overworked and understaffed. Try a broker instead.

For the annuity to count as income you generally need to prove the income will last at least 3 years

  • June 12 2010
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mkpalos - Mark's answer is right on the money. We see bank loans falling out all the time late in the game.  Too bad they can't be held accountable.

Anyway, Fannie Mae is pretty much maxed at 45% to 49% DTI and Freddie Mac will go (oddly enough) to 50.4%.  Weird. We know about Freddie because we just tested that on a file this week.

Try another lender - but make sure they can run their own automated approvals (instead of waiting for the Underwriter to do it) and that you feel comfortable the loan officer knows what he or she is talking about.
  • June 13 2010
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Good advice here already.   At 52, there are probably a handful of things that can be done to restore your ratio to an acceptable level.

Recently established Annuity income should be usable as long is it can be verified it will continue for 3 years.    I'm not sure why they would disualify that income.  Did they give you a specific reason for this not being accepted?   I would press them on that issue.

Another question I would ask is what payment is being counted against you for your 2nd position loan with Citi.  Some lenders will use the monthly payment on your credit report (which should be very low now), other will use 1% of the balance, so if they are not using your actual payment, that could be another cause of the problem.

Other things you can do to get your ratio back in line include, asking for a lower rate (with added cost), a different loan program (longer term, 10/1 ARM), adjusting your insurance deductibles to lower premium, paying off installment debt, etc   2 points of debt ratio can usually be found somewhere.

  • June 14 2010
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