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#2045125 - 10/20/15 03:08 PM Portfolio Loans-Pulling Credit Again Before Closin
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Diamond Poster
Joined: Nov 2008
Posts: 1,055
In the mountains
For portfolio loans, if the loan closes within lets say 45 to 60 days, is there any real value to re-pulling a credit report on a customer? I know that inquiries will show immediately, but its not likely that the total debt will change much or many late pays would show up because of when these are reported. I have ATR as of consummation in mind when asking this question.

I'd appreciate it if others would share their process in this area.
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#2045136 - 10/20/15 03:22 PM Re: Portfolio Loans-Pulling Credit Again Before Closin Likes to Comply
RR Joker Offline
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RR Joker
Joined: Nov 2002
Posts: 20,654
The Swamp
Checking for new debt may be prudent. FWIW, we do not re-pull credit prior to closing.
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#2045156 - 10/20/15 04:07 PM Re: Portfolio Loans-Pulling Credit Again Before Closin Likes to Comply
Always In Training Offline
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Joined: Jul 2006
Posts: 1,111
Where the Green Grass Grows
Will you issue a denial 2-3 days before closing? Put everyone out the costs of the process and cost the borrower points on their credit score because you pulled credit twice (or more)?

How would you go about telling someone, hey, I saw where you applied for a furniture store (or home improvement store) credit card or line of credit -- and now you can't buy this house?

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#2045177 - 10/20/15 05:08 PM Re: Portfolio Loans-Pulling Credit Again Before Closin Likes to Comply
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Diamond Poster
Joined: Nov 2008
Posts: 1,055
In the mountains
We have a loan that took six months to close because of a shared well on the property. The ATR was reviewed at the beginning of the process and was never looked at again. At or before consummation is not specifically defined in the regulation and so we are trying to decide if it would be wise to set a limit. A lot can change in six months and these changes, if debt related, will have enough time to hit the credit report. Perhaps 60 or 90 days would not make much of a difference.

We don't collect fees until closing so the customer wouldn't be out money (we would), we would use a "soft pull" so it would not affect the customer's score. However, as you said, we would have to consider if the loan would then have to be denied based on the newest information. But really this is the same risk if we find out before closing that the customer has lost or changed jobs which has affected their income. We would not knowingly put them in a loan they no longer could afford.

We are trying to think through all the angles and was wondering if anyone had put something in place to mitigate risk in this area.
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#2052446 - 12/04/15 01:17 PM Re: Portfolio Loans-Pulling Credit Again Before Closin Likes to Comply
OldSchoolBanker Offline
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Joined: May 2005
Posts: 660
FL
We are primarily a portfolio lender. We used to pull a GAP report (covering app date to closing) but now subscribe to a monitoring service from Equifax. We are alerted to credit inquiries and new accounts that are opened. This helps us know of new debt without having to pull a formal report.

It is a best practice to do some form of added due diligence prior to closing. Your post closing Quality Control process should be pulling new credit reports on their sample loans to validate underwriting.
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#2055211 - 12/21/15 08:57 PM Re: Portfolio Loans-Pulling Credit Again Before Closin Likes to Comply
Tracey, CRCM Offline
Platinum Poster
Joined: Jul 2015
Posts: 542
Gorham, ME
After 6 months, we would consider the credit stale (at least in my world) and we pull again. Credit expires after 120 days.
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#2055373 - 12/22/15 07:19 PM Re: Portfolio Loans-Pulling Credit Again Before Closin Likes to Comply
Dan Persfull Offline
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Dan Persfull
Joined: Aug 2002
Posts: 46,762
Bloomington, IN
How would you go about telling someone, hey, I saw where you applied for a furniture store (or home improvement store) credit card or line of credit -- and now you can't buy this house?

That's the whole purpose of the following statement in your approval/qualification letter.

There can be no adverse changes in credit history, employment, income, assets, ability to repay or deposit accounts prior to closing the loan.

From 1026.43(c)

(vi) The consumer's current debt obligations, alimony, and child support;

A 60, 90, 120, 180, etc. day old credit repport is not going to give you the consumer's current debt obligation.
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The opinions expressed are mine and they are not to be taken as legal advice.

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