What’s on Your Post Foreclosure Due Diligence Checklist?Banker Resource
February 18, 2013 — 1,519 views
When the process of foreclosure slowly draws to a close, calling it a ‘case closed’ can be increasingly tempting. However, several other important procedures and steps must be taken during the latter stages of a foreclosure to ensure that proper care of your customer is taken throughout the process. As a banker, when a loan is sanctioned to a customer, information about the customer’s job status, monthly debts, and gross monthly income must be gathered. Underwriters will have to review the customer’s financial information in order to ensure that he can afford periodical payments.
After foreclosure, issues relating to title insurance often arise in case an insurer refuses to issue a copy of the title insurance document on foreclosed properties. An increasing number of insurers are becoming reluctant when it comes to issuing title insurance for properties that have been foreclosed. In addition, insurance companies that offer this service are rare, making it difficult for banks to locate them.
Customers who wish to purchase a foreclosed property find it hard to secure mortgages if there is no title insurance for the said property. Title insurance is a major requirement to get finance approved for purchasing a home. Moreover, claims of illegal eviction from past homeowners may lead to serious problems for the purchaser. The problems connected with issues relating to title insurances can be resolved by seeking assistance from company attorneys in order to ensure justification of the foreclosure.
Post foreclosure due diligence requires you to check a series of your customer’s documents to ensure that bankruptcy isn’t on their cards. Following are the documents you must request post foreclosure to ensure that they can afford payments on the foreclosed property.
Copies of a couple of their latest federal income tax returns can be used to cross-check the sum of income claimed from the federal government each year. You will require returns for the past one year or so in order to ascertain that the customer’s yearly income has either increased, or at least remained steady.
Paycheck Stubs from Work
Paycheck stubs disclose the monthly income of an individual. The customer must furnish the last two pay checks he has received from his employer. Verifying your customers’ paychecks will help you determine whether or not they have a reliable and steady income that can help in clearing off the mortgage.
Letter of Employment Verification
Your post foreclosure due diligence checklist must include a provision for your customer’s employment verification letter. Customers must furnish a letter signed from their employer stating the period of time he has been working for a particular company, the position he holds, and the annual salary he earns. You can ensure that your customers have a secure and stable position with their employers through a letter of verification.
Loan Statements and Credit Card Bills
Copies of your customer’s latest student loan statements, auto loan statements, and credit card bills must be requested after foreclosure. Statements such as these will help you determine the debt obligation of your customers on a monthly basis.