Why do you need so much stuff?

We in the mortgage industry ask that same question every day.  The quick answer is because we do.  The longer answer is that out of the financial crises of the late 2000s the Dodd-Frank Act was created which created the Consumer Financial Protection Board (CFPB) which created a rule called the Ability to Repay (ATR).

ATR requires that all mortgage lenders fully document a borrower’s ability to repay their loan.  If they fail to do so, and the borrower defaults on their loan, the borrower can sue the bank for their failure to do their due diligence.  It does not matter if there was a job loss or death in the family etc.

So because of this heightened legal risk, mortgage lenders are now asking for “everything”.  This is the obvious things like pay stubs and bank statements but also the things that don’t seem to really matter like what that deposit was in your bank account.

ATR has particularly hard on people who are self-employed or have an ownership interest in a partnership or business (regardless of how insignificant it is).

So the bottom line is we don’t like asking clients for lots of stuff and we don’t ask for things that we don’t need.