Non Occupant Co Borrowers and Success in 2011


Non-Occupant Co-Borrowers; RIP

Remember when mom and dad could co-sign for their kid's first home or the "kiddie" condo when they went to college? Like so much in the mortgage biz...those days are gone. Non-Occupying Co-Borrower Income is Fannie Mae's official term.

Oh, you can have a co-borrower but this is how it doesn't work. On one hand the rules say "...income from a non-occupant co-borrower may be considered as acceptable qualifying income." But this is ONLY for manually underwritten loans. I don't know of anyone manually underwriting loans anymore. Rather, we (lenders) all use DU (Desktop Underwriter) a massive software program of Fannie Mae's that electronically underwrites files.

Here is the oxymoron. DU will accept a non-occupant co-borrower but DU will NOT take into consideration the non-occupant co-borrowers income or liabilities and will not require verification of employment or income for the non-occupant co-borrower.

To summarize. A non-occupant co-borrower can not be used in lieu of the borrowers derogatory credit. So the borrower must have good credit. The non-occcupant co-borrower's income nor liabilities will not be used. So that eliminates two of the three "C's", credit and cash flow (debt ratios). Additionally, the borrower must still reasonably demonstrate an ability and willingness to make the mortgage payments and maintain home ownership.

Oh, I almost forgot...this has to be the reason to use a non-occupant co-borrwer...reserves. Yep, the borrower can afford the house, has the credit, not too many liabilities, they love the house and are certainly going to put pride of ownership all over it but omg, they don't have any reserves!

Above is the semi-official explanation of non-occupant co-borrowers...I can't resist sprinkling my sarcasm on this topic! The bottom line is they are a thing of the past. It has been well over 10 years, in fact I can't remember the last time I successfully used a non-occupant co-borrower. If mom and dad want to purchase the kiddie condo for junior to attend college, its just became an investment property. 



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Success for 2011
Uncovering the Ice burg

Success is like an ice burg. The tip of the iceberg one sees is approximately 10% of the ice burg. Our conscious mind controls about 20% of what one thinks, feels and does (the tip of the ice burg) and our unconscious mind controls 80% of our thoughts, feelings and what we do!!  And these thought patterns and subsequent values we form are imprinted in our unconscious by the time we are 10-12 years old. Fair to say then that the majority of our life shows up because of what we have unconsciously come to a child!

We are in the last quarter of 2010! Omg...where did it go? NOW is the time to create a vision and S.M.A.R.T. goals for 2011. But if the basis of one's vision and goals is overlayed on the filters of yesterday, one's unconscious belief system, how can 2011 show up any different? By awareness! Consciously becoming aware of what your unconscious beliefs are is the first step at looking below the water line and seeing what is there. This is the critical first step. Too often people do this and judgment, resentment and anger come up. This step is about awareness and nothing else. If any form of fear, judgment, etc., comes up, release it and let it go. Those emotions only serve to keep yesterday in place.

This is why people get a divorce only to remarry someone remarkably similar to their previous spouse. Or the roller coaster of making money and not having money, up and down one goes. The person that has a chronic health issue, so much so that has become their identity. The list goes on and on but these serve as examples of what life can look like when the unconscious beliefs of the past have their grip on you.

Here is the beginning and magic to change. In becoming aware of an issue in one's life look at the issue in the context of the observer. Something happened and you gave it meaning. The meaning got hardwired into the subconscious. Now, look at the issue as the observer and see how many different perspectives you can look at the issue in. Make it mean something different. For example, my mom made a very limiting comment about money to me as a child. I take it on unconsciously as my belief. How did I know, at that time, that being a child of the depression her parents instilled limiting beliefs in her? When I can begin to see she meant well but it was her limiting belief, I can begin to make the issue have a totally different, self-empowering vs. self-defeating, meaning to me. This one exercise has the power to literally rewire one's DNA!

Success in 2011; begin looking under your waterline and becoming aware of unconscious believes that have shown up as limiting thoughts, feelings and actions. With the information above, you can begin to remove the self-limiting habit patterns of the past and create a vision and subsequent goals for yourself that are created by a future that calls to you vs.. a future that is repeated from the limitations of the past. To the best year, life to date, of your life: 2011!

Jim Hostler
Senior Mortgage Loan Consultant

Lenders Direct
a division of Gateway Business Bank

Direct: 928.225.7418

Fax: 928.527.7943

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This is not the opinion of Brad Bergamini, Realty Executives Northern Arizona or any of its affiliates.  This post is for informational purpose only and is not guaranteed and does not render as legal advice.  Buying and selling Real Estate in Arizona or Prescott Arizona is a serious task and should be consulted with personally with Realtor or Real Estate Attorney.  Please visit my website for contact information or