NON STATUS MORTGAGES APPROVAL PROCESS

2007-03-08 10:33:40

( Financial )



Lenders normally approved mortgage applications based on applicant’s credit history and current income. Negative credit history normally receives low loan approval rating. There are lenders who offer loans to applicants who have no credit history to vouch loan applications. These types of loans are called non status mortgages.

Non status mortgages require no proof of previous loan accounts and to some extent no proof of income status. It is considered a risky loan product. Collateral is required to off set the risk of non status mortgages. Even with the security of collateral the maximum loan amount granted is lower than the normal its normal assessed value. A credit check is done to evaluate whether to approve the loan or not.

A credit check involves a background investigation of the applicant as an aid to credit evaluation in the absence of a record of credit history. Loan officers conduct an interview of the referrals of the applicant to establish character particularly in relation to fulfilling responsibilities as an indicator to good loan repayments. Referrals can be an employer, a friend, or an informal provider of credit normally not listed with regulatory institutions.

Lenders rely on the applicant’s character more than the value of the collateral for the loan. It is important to establish the applicant’s character of honesty and responsible towards obligations during the background investigation. These characteristics indicate the applicant’s attitude towards loan repayments even in the absence of a credit history record.

Processing of non status mortgages is very tasking on the part of the lender and very rigorous on the part of the borrower. The lender needs to carefully assess the ability and willingness of the borrower to pay the loan in the absence of a credit history record. The borrower, on the other hand, need to come up with good referrals to prove credit worthiness. Consistent information must be gathered to establish the character of the applicant for loan approval.

You might not have a positive credit report to back up your mortgage application but you can get positive reviews from referrals that can ink you that coveted mortgage. This is the benefit of having a good character.


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