Trust, then verify, DSCR loan applicants – National Mortgage NewsSeptember 27, 2023
Trust is an important component of every relationship, particularly in an agreement between borrower and lender. False or misleading information may seem like a shortcut that can produce some near-term benefit, but in the long term it creates dysfunction in the system, increases risk and ultimately drives up costs for everyone.
One increasingly concerning way in which borrowers may try to "pull a fast one," sometimes even with the encouragement (explicit or implicit) of loan originators, is in misrepresenting the nature of a property for which they are applying for a mortgage. Claiming that a home will be used by the owner for rental, rather than as a primary residence, can pave the way for faster and easier approval via calculation of the debt service coverage ratio (DSCR).