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Comment by Cyder | Hacker News Reader

People out of work due to covid are refinancing and rolling their late payments into their refi to keep from losing their houses. Basically, Fan & Fred are charging you for letting you refi instead of foreclosing. They're charging those without money again.

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As far as I know, providing proof of income is part of the requirements for issuing a conforming loan, i.e. coming from the government (Fanny/Freddie/Ginnie).

I would be surprised if out of work people can refinance a home mortgage loan without proof of income.

Yup, just closed. Had to provide pay stubs at the start of the process, and then again at the end to prove I was still employed. They made it very clear that we would not have closed without that, and this wasn't even a gov backed loan.

Yes as someone who has worked in the industry. We will call to verify your employment days before closing. You'd be surprised how many people decide to make stupid career decisions in the middle of loan financing. One guy I had quit his flooring job to become his own contractor. Another lost her job cause their restaurant burned down. I also had one lady get laid off literally the week of our closing (which was awful cause their employer didn't even mention anything to us when we requested her pay information weeks earlier).

What we'd always tell the borrowers is "don't make any life changing decisions while your in this process. Do it AFTER we give you the money!"

>(which was awful cause their employer didn't even mention anything to us when we requested her pay information weeks earlier).

Why would an employer ever reveal this? Seems like all liability for no gain.

They have to do this because the legislature isn't providing stimulus or protection or funding Fannie directly.

Yep. They assume these folks are high risk for eventual default, so they are squeezing the lemon while they can.

A lender giving someone hundreds of thousands of dollars that the lender is predicting they won't get back in exchange for 50 basis points in the near future does not make sense to me.

Fannie Mae and Freddie Mac package up the loans and sell them to other entities. They don't often end up holding the bag.

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