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Explaining Split Household When Qualifying for Mortgage

Doesn't it violate federal law if a lender asks a married couple to explain why they live apart?

I was part of a large layoff and found an opportunity 4 hours from my husband and our home. We have a $215K ($1230 month; on $615 biweekly payments) house in SC and are seeking to purchase a $200K home in VA; we make over $160K a year and have almost all our credit card debt paid off (owe $4200 which will be paid in full at 0% interest in June, but we used a large portion of our liquid assets to pay off on 10/30/09); the only debts we have is a car ($385 month); student loans at $750 month; and one large loan (line of credit unsecured) at $1000 month (payment is $700 but we overpay each month with a balance of $30K); we clear approximately $8600 per month. In applying for the second home mortgage which will be my primary residence, my husband was placed on as a non-occupant co-owner by the underwriter since he still works in NC even though he will split his time between the two homes (4 days in SC, 3 days in VA 8 months of the year; the other 4 months we will alternate weekend in each location) the mortgage company had us provide a letter indicating how we would visit each other and maintain our marriage with us living in two states. The exact words were "They just need a letter explaining the distance between you and your husband now that you work in VA and your plans on how you will visit each other. Since you are now living apart the letter is needed to justify using your husband's income to qualify for the loan." Does this not violate federal law under the EOCA? What can I do if they now decline me? They say I am only pre-approved as of 11/1 "Your loan as been pre-approved based on the information you have provided." Which was the three-page letter explaining my marriage and our 20 years of being together and how we have managed our relationship through distance before (which I am happy to provide to you in another forum). In addition, that preapproval is all still conditional upon 8 factors/items to be provided 7 days before settlement: 1)Ratified sales contract and all addenda 2) Income and asset statements dated within 30 days of settlement 3) Legible copies of Driver’s Licenses and Social Security Cards (provided on 8/30/09) 4) Signed Lender disclosures 5) Proof of Job Offer and Re-Location offer for borrower (provided this on 8/30 when I signed the sales contract) 6) Assignment Letters (Borrowers and Lender) 7) Compliance with any other FHA U/W Guidelines 8) Satisfactory property appraisal. We are prior military and I find this entire situation absured. We have a contract for a new townhome to be built, which construction has not even begun and will not begin until 3 of the 4 units are sold. As of today's date only 2 have been sold, but I cannot verify the other one at all and they cannot tell me when construction will ever begin; when is a "reasonable amount of time" in VA to simply get back our earnest money and walk away from all of this mess if advisible at all. We really like the area and the townhome, but I have plans to spend all day Wednesday looking for something else - or am I just wasting my time?

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Bills.com | Find Learn Save

Regarding your question about the letter of explanation regarding your split-residence with your spouse, this is a fairly common living arrangement and it is common for lenders to ask borrowers to explain if you two are living as a common household with shared income and expenses or are married in name only.

Regarding your question about the townhouse, I cannot offer a helpful opinion. You stated that you like the area and the design of the townhouse. Obviously, you are willing to accept the risk that the builder may never start the project or even stay solvent. What is a "reasonable" time to wait is a question I cannot answer because I do not know the market in question. In some markets today buying anything but a short sale property or foreclosure is foolish, but in other markets the housing market is much healthier.

I hope this information helps you Find. Learn & Save.

Best,

Bill

www.bills.com/

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