We Aren’t Being Nosey, We Really Need to Know!
We are frequently surprised by the things that potential borrowers are willing to tell us, and conversely, that which they are not willing to share. They are usually happy to give us authorization to review their credit histories, tax returns, bank statements and a copy of their driver’s license. They sometimes get evasive, however, when we ask things that are frequently a matter of public record, such as operating agreements for businesses, who the members of an business entity are, etc.
When a borrower files an application hoping to get a rehab loan from RFG, we require that they show access to a certain amount of cash. Frequently, we receive bank statements from legal entities (as opposed to the borrower’s personal account) to support the cash requirement. Under RFG’s underwriting guidelines, this is not problematic if the borrower is the sole member or owner of the entity holding the cash. If others are involved in the entity, we need to know who they are, and bring them into the loan as guarantors. It would be irresponsible for a lender to lend money to a borrower based on cash that potentially belongs to someone else.
When statements from multiple companies are presented, it is not okay to give information on some and not others. We need the same information for every company if the borrower wants us to count the cash and cash flow into the underwriting equation. As the Lender, we are not trying to give an applicant a hard time, we just want to make sure that we are relying on assets that actually belong to the person and/or entity responsible for repayment of the loan.
When you apply for a loan, please remember that the Lender does not make money if they do not make a loan. Accordingly, the Lender is not deliberately putting down roadblocks to your success, but merely making sure that the loan works. At the end of the day, the Lender wants to get paid back AND make sure that you have a successful experience with them. At RFG we hope to work with you on many profitable loans for both of us, not just one that in the end will be problematic for all.