Stupid and Illegal Requirements from Mortgage Underwriters

frustrationWhat is the worst request you’ve ever seen from a mortgage underwriter? What paperwork was asked for that was totally over-the-top ridiculous? More and more, home buyers and homeowners refinancing are being asked to provide documentation that makes no sense whatsoever. Some of the information they’re asking for has already been provided in two different forms already, so digging up yet a third verification seems downright stupid.

And then there are the underwriting requirements that are actually illegal.

That’s right. Some underwriters today are asking borrowers to give them paperwork they have no business asking for! It’s high time this come out in the open and that underwriting supervisors and mortgage managers put a stop to this madness. Can we have some common sense in the underwriting department, please?!

For example, yesterday I was talking with a self-employed chiropractor. When his purchase loan was in progress, the underwriter from the wholesale bank that his broker was going through asked him to submit all of the checks he had deposited into his business account in the last year. He had already provided three years’ income tax returns (which they verified with the IRS) and his bank statements. And now the underwriter wanted to see all the personal checks that each and every one of his patients had paid him as well? He told her, “No way, that is doctor-patient privileged information, and it would be illegal for me to give that out.”

Another home buyer (at a bank) was trying to get pre-approved. His application showed a gap in employment during a time when he was hospitalized. However, during that time he maintained his perfect credit; and now he was fully recovered and back to work. The underwriter asked him to provide a letter from his doctor stating he would not get ill again. Can you imagine any doctor guaranteeing someone would not get ill in the future? Talk about underwriting stupidity!

I am making a public call for common sense to come back into the underwriting department.

In the meantime, what is the worst underwriting requirement you’ve ever seen? Please either post a comment (you’ll see the comment tab at the top of this post) or send me an email by clicking on the Ask a Question page (see big blue tab at top).

35 thoughts on “Stupid and Illegal Requirements from Mortgage Underwriters

  1. I agree, some of the stuff makes absolutely no sense!

    Luckily, not all underwriters are like that. My team rocks and we close loans fast!

    J Alfredo Robles

    Mortgage Banker NMLS: 346071

    Proficio Mortgage Ventures, LLC.

    a wholly owned subsidiary of Proficio Bank

    2550 Westway Drive, Suite 101

    Brunswick, OH 44112

    619.600.6595 direct

    SKYPE: J.Alfredo.Robles

    TEXT: 619.600.6595

    This email and any files transmitted with it are confidential and may be legally privileged and are intended solely for the use of the individual or entity to whom it is addressed. If you are not the intended recipient, please note that any disclosure, distribution, or copying of this email is strictly prohibited and may be unlawful. If received in error, please delete this email and any attachments and confirm this to me at

    Thank you.


  2. Why would they need that kind of information, especially the doctors checks for the past year? Trying to get a mortgage was almost impossible for me, but I finally found a company that didn’t ask me for the past 3 years of my income taxes.

  3. We were supposed to close today, and the underwriters had gotten into my three adult children’s checking accounts, thinking I was hiding something from them. they were scrutinizing purchases and payments they made in their accounts three months ago, which of course, have absolutely nothing to do with my husbands and my credit. We are still waiting to close because of their error. I’m not even sure what they did was legal.

    1. Jenifer, I would like to know more about why the underwriters were looking at your children’s accounts. Were they gifting money to you for the down payment? Maybe we can take this conversation offline so you can give me more details privately. You can email me through my “Ask a Question” page in the blue bar at the top.

      1. My underwriter set a condition to me to have my employer agree that i can work remote out of state for a year and that my salary will not be impacted. Managers with my company make approvals via email and informal no official document. I provided the email of approvals that allows me to work remote. In turn, they are now saying the home is a second home since I work out of state and the interest rate would change. I asked what was the question on the table and I was told by my loan office I need to prove I am not buying an iinvestment property which was also being considered. None of this makes since to me, I am a First Time Home Buyer and yes I live out of state and work out of state but returning home to Virginia is where I choose to buy my first home. My loan officer ask me to write a letter to the underwriter to explain why I wish to purchase a home in Virginia and to explain my company doesn’t have a formal form to produce. I am awaiting a reply. My other issue with this process, is once my Load office provided me with my rate and we were discussing best rates somehow I was hit with predatory bowndown fees to hold the rate of 3.5. My load officer didn’t say the rates were changing as we were discussing the best alternative for me but within 5 minutes or less the bowndown rate went from $800 to 2500 and that is when my load officer emphasized, we needed to lock the rate. I was shock and very upset. She said she would explain to her supervisor what happen and ask if they could hold the rate but she returned and stated he said no. I feel as though the bank is taking advantage of me and charging me increase fees when ironically, when I requested to by down to a rate – the request was refused and I was told by statute it was not allowed. I was upset again becuase my rate went from $800 to 2500 buydown rate to hold 3.5 interest rate but I could not choose a buy down rate that would reduce my home payments to a more comfortablee rate.

      2. Shelly, I am sorry to hear this is happening. I know how stressful it can be!
        1) The underwriter is not 100% confident your file proves you are not buying an investment property. There has been so much fraud in that area, that they need strong documentation. You need a really good Letter of Explanation to go in your file with bullet points showing why this will be your primary residence. In addition, you need to get a letter on company letterhead that is signed stating what the underwriter asked for. Apparently, the emails are not strong enough proof. I don’t know if the emails has a company signature at the bottom or not. Additionally, tell your loan officer to tell the underwriter to call on the phone to confirm you can work out of state with no negative impact on your income.
        2) It appears that you got caught in a space of rising interest rates. Sometimes that happens. No one can control interest rates. Oftentimes when rates take a sudden rapid increase, they come partially back down a day or two later. I usually wait out those couple of days and do not lock at the peak.
        3) This is an example of why I do not favor going to a bank for a mortgage loan. If you read any of my books you know this. A broker can better help and protect you. A broker can switch to a different wholesale lender with a better underwriter. A bank is stuck with their one underwriter. A broker can shop lenders to get you the best rate. A bank is stuck with their one rate.
        You might ask your loan officer to speak with the underwriter’s supervisor. If they refuse to give you the owner-occupied loan, (after you provide the documentation in #1 above), then you might consider switching to a good local mortgage broker.
        Good luck and best wishes!

  4. i’m borrowing 150k for a first time home, i have provided more then enough paper trails to prove i make over 80k a year and the under writer asks me about a $24.00 purchase online. i’m so close to telling these guys to piss off ill get my loan some where else.

    1. Jimmy, I agree with you 100 percent! Your loan officer should be telling the underwriter to get a grip on reality and remove that insipid condition.
      Which lender is it? Let’s post the name to let others know to stay away from them.

  5. I am buying a 143,000 house with a 780 credit score 4,800/m income (after this lender hit my credit with numerous inquiries, it was 800!). I am self employed and have been for 6 years in the same field with a steady income. I fulfilled all of their required documents, and received my commitment letter- with 12 stipulations attached. One was to completely pay off my car loan (owe 2400 on it-my only other debt) and to have 10,000 more in savings than we need for closing. They of course want it done IMMEDIATELY. They already required me to pay 1,000 on my car loan. Then they went back all 6 years on my tax returns and I had to provide a letter stating the slight variation of income (around 1500-2000 each year). The also are asking for my FULL september bank statements WELL before the month is even over. 9/1-9/30 required by 9/20.

    WHAT!? I am so over this!

    1. I agree with your response: Whaaaaat?!!

      I haven’t seen your loan file and I don’t know who the lender is (wish you had stated it), but based on what you have said, I would go to another lender.

      A couple things to note: When a car loan has no more than 10 months left, you don’t have to count the monthly payment in the debt ratio. And, two years’ tax returns are the requirement for Fannie Mae.

  6. Love this post. Feel a bit better today, as I dig up every cancelled check paid to my landlords over the history of our rental, and our lease agreement (how is that relevant in any way, shape or form?). My credit is 800, has been at 800 forever, and I’ve been employed by the government for 10 years without pause or problems. And I’ve had to request and send in four different interim statements from my checking and 3 savings accounts, because every 4 or 5 days they demand to see documentation of any new transactions. WTF??? How are they not wasting money themselves on paying salaries to people to collect these crap, when obviously whatever transactions I’ve had in the 2 weeks before closing have about a 0% chance of being wildly different from my long-term credit history?

    1. Sounds to me like you’ve got a lender with a bad underwriter and a loan officer who is not doing his or her job by standing up for you. Let me guess…is it one of the Big Banks?

  7. If I’ve furbished proof that I’ve paid my last two years of owed back income taxes, (copies of checks, Stamped Reipts from IRS and bank statements showing the funds have cleared my account) the underwriter is now requesting the impossible: A letter from the IRS stating I owe no more penalty or interest. After consulting the Accounting firm I used, they’ve never heard of this request and stated the IRS will not provide such a letter. Why can’t they just submit the 4506T form again to verify the last 2 years are good to go?

    1. This is another case of a stupid underwriter asking for something that cannot be obtained.

      Write a letter that explains what you have told me and add this sentence: “I cannot provide a document that does not exist.” Sign it. Then add: P.S. I will be posting a review on Yelp. Send it to the branch manager and the regional manager and the company CEO or President. I can pretty much guarantee you that requirement will be waived.

      Please come back and let us know what happened! I want to hear the end of your story. I’d also like to know who the lender is. If you don’t want to post it publicly, send me a private email at askcarolynwarren at gmail.

      1. Just to follow up on my previous complaint; I did what you said to do, with one small adjustment: I told the Manager what the UW was asking was unprecedented and not needed and if I need to I’ll go above his position very loudly that their UW request was not acceptable.
        Remarkably I received my Clear To Close yesterday. I’m closing Monday. Hopefully it goes without a hitch.

        Thank you for your incite!!


  8. My closing date is or at least is suppose to be a week from now. And today the underwriter ask for a dr letter that will state that my wife’s disability and income source will last more than 3 years. My wife have been disabled since 2008 but no dr can guarantee she will not get better for the next 3 years. The CFPB issued a bulletin regarding this in 2014 but it seem some underwriters are under train or deliberately ignores the law. I send the underwriter a copy of the CFPB bulletin lets see what I heard back. That was the only condition from the 6 asked I got an issue with.

    1. William, I believe the underwriter is trying to follow the rule that says in order to count certain types of income, it needs to continue for three years. If you have a paper that says her disability is permanent, that would work. That said, I agree with you: no doctor can guarantee anything about a person’s health. For an underwriter to ask for that is plain stupid. Hopefully, the underwriter will put that bulletin in the loan file and call it good. If needed, ask for the name of the Branch Manager and then call and speak to him or her. Managers can override underwriting requirements.

      Do you need to count that income to qualify for the loan? If not, tell the loan officer to remove that income from the loan application and rerun Automated Underwriting: then it won’t be required.

      I’d like to hear how this turns out for you.
      ~ Carolyn Warren

      1. Hi Carolyn,

        Sorry for the late reply I was waiting to actually close to let you know the outcome. The next day after sending the CFPB bulletin to the underwriter I was told that I was right and that I didn’t needed to provide a letter from my wife’s doctor. We closed on the 7th as scheduled so everything turned out fine.

        I will recommend to anyone in the same situation to provide the lender a copy of the CFPB bulletin that can be found at

  9. I have been trying to refi my 5 yr ARM into a 15 yr fixed since February. Despite the world’s worst appraisal (our brand new $40k barn was valued at $1k for example) we still are under 60% LTV, have 780-800 credit, 10% debt to income ratio, and enough in savings to pay the mortgage in full. I thought we might run into problems as my husband owns his company, but that was easy. The UW is hung up on the fact that my 2 kids were dependents on 2015 tax return but not 2016. I explained that they are both adults, but had to be dependents in 2015 for ACA health insurance. We ended up not qualifying and purchasing private insurance, so did not claim them the next year because one got married and they other would get a bigger refund if we didn’t claim her. That explanation was not enough and I had to have the court send my 15 year old divorce documents even though I am remarried, own my home in my name only, and my kids are in their 20s.

    I used to be a real estate lender in the 90s when we had to verify and document pretty much everything, but this is beyond ridiculous. The regional manager called me to say that he thought the UW was being too demanding and that they have since changed their policies but that went into effect after me. He also mentioned being afraid of me suing them for discrimination.

    He actually waived the requirement, but the UW went around him and tried to get the title company to obtained the divorce decree from the court. I know the title officer so he emailed me to let me know. I was supposed to close a month ago, but it’s still in UW hands. Sooooo frustrating.

    1. There is absolutely no reason or excuse for putting you through that kind of underwriting nightmare! I hope you will file a formal complaint. In my opinion, they should waive your closing costs for this unnecessary abuse.

  10. The questions they ask are beyond absurd. I’m trying to get a mortgage from BofA. My credit rating is 813 and I’ve got more than enough in savings to buy the place outright. I have full time employment making over $120,000 per year and have been at the same job since 2004 so I’m no flash in the pan. Yesterday, they asked me to explain my 400+ mile daily commute. WTF? I work from a virtual office in my home in Virginia and my employer’s HQ is in South Carolina. I travel to HQ maybe once every 3 years. Are they really stupid enough to believe I commute 400 miles one way each day? Then they wanted to know about a $25 debit to my checking account. The mortgage is for $340,000 and they want to know about 25 bucks? Are you kidding me? I recently sold some property and deposited the proceeds into my checking account. A week later, I transferred about 98% of it into my savings account. I needed to write a letter of explanation for why I did that. Who gives a sh&%! I move money around in my accounts all the time but that’s the only transaction they insisted I explain. Finally, I run a small biz on the side. It nets anywhere from -$1000 to +$3000 per year. I gave them the tax returns for 3 years but then they wanted balance sheets and profit & loss statements signed for 2 years. Really? The total value of the income from the S-Corp is less that 1% of the mortgage, literally a penny on the dollar.

    I asked them today if they really wanted to give out mortgages or is this something like the Monty Python Cheese Shop skit.

    1. George, this is a perfect example of why I don’t favor the Big Banks. I will tell you exactly how to get reasonable underwriting without those nonsense conditions. Find a mortgage broker in your area who is approved with United Wholesale Mortgage. UWM is the best! Great service, great pricing, great underwriting.

      1. i am moving soon (to another state) and i asked my new mortgage person about UWM. she said that they do business with them. look forward to new challenges !! thank you for your insight !!

  11. i want to know WHY processor is asking me to do my current year taxes before the year is up ? she told me “we just want to see how things are going”.

    1. What a terrible answer to your good question! The reason why an underwriter might ask for a year-to-date Profit and Loss Statement for a self-employed person is because they have nothing to show 2019 income. With a W2 employee, there are paystubs that show current year-to-date. You don’t have to do your taxes early. You only need a YTD P&L, estimated and summarized, signed by you. (They want to see that your income is not declining.) What state are you in? CA or WA, by any chance?

      1. Hi Carolyn!
        I have given W2
        And 3 yrs past of tax return
        I’ve just never heard of this.
        Hubby is listed as employee.

      2. Then the request makes no sense whatsoever! It is not required by Fannie Mae, Freddie Mac, et. al. I hope you can fire this lender and go find a good mortgage broker instead!

    1. Celeste, yes, if your debt-to-income ratio is too high to qualify for the loan, then in order to save the loan from being denied, the underwriter can require a debt to be paid off. Underwriters don’t randomly require debt payoffs–only when it is needed for the debt ratio to qualify.

  12. can a underwriter ask for documentation thats outside of the loan program guide lines ? I did a loan that required my 1099, now she’s asking for bank statements which are not required. i was approved and thats one of the conditions. My loan officer said he’s going to take care of it, but are there chances that he can go over her head about asking for documentation out side the program guide lines ?

    1. Sharon, that’s a great question! Some underwriters are absolutely horrid to work with, and it’s my opinion that they need to be put back through training. But to answer your question, Yes, underwriters can ask for anything they want in order to feel comfortable in approving the loan. Some underwriters are paranoid and don’t care about customer service, so they will make everyone’s life a living hell while going through the process. In turn, the loan officer can argue for waiving unnecessary conditions. Good loan officers get very good at doing this when they have an unreasonable underwriter. In fact, I’m wondering why your loan officer didn’t do that in the first place before coming to you and causing you stress…? If the loan officer is unsuccessful, you can speak with the branch manager. Underwriters won’t take your call, but the branch manager will!
      One more thing: loan officers who are mortgage brokers learn to avoid the bad underwriters altogether! They simply go to a different wholesale lender. That’s what I do. I only work with wholesalers who have fabulous underwriters. My clients never go through that kind of stupid stress. This is yet another advantage of choosing a broker over a direct lender or a bank.
      Please write back and let us know if the unnecessary condition got removed or not. I want to hear the end of your story.

  13. My UW asked me for an explanation as to why I am paying on a student loan more than what I should, I simply answered: “because I can afford to pay more and save on interest”.

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