How to Avoid the Most Deadly Lending Landmines...

Here are some tips I learned from a seasoned California mortgage banker who successfully funded over 100 loans during the tough transitional 2007 real estate market. These tales from the trenches can prevent your deal from the shrapnel of a loan decline or last minute tighter "prior to document or funding" conditions:

Most conventional (up to $417k) and non-conforming (Jumbo) loans above $417k require Desktop Underwriting approval
Conventional secondary financing is very difficult to obtain. A maximum of 90% loan-to-value (LTV) ratio should be relied upon from the buyer
Jumbo interest rates are currently at least 1.375% higher than conforming loan interest rates
Secondary "seller carry-back" financing is a great sales tool strategy. In some cases 100% total loan-to-value will be allowed with the first loan at 80% LTV or less
Beware of "declining market" underwriting guidelines -
A 5% reduction on the guideline is required by most lenders, so if the buyer is applying for an 80/10/10 loan, the underwriting guideline would have to meet or exceed 85/15/5 underwriting guidelines
Be sure to work out these important details in advance during the loan "pre-approval" stage instead of in the middle of a transaction!
All of California is now considered to be in a "declining market"- check with your lender to see how your local market is rated
Credit scores of less than 620 will not pass
Appraisal reports are submitted to underwriting
Underwriting runs an Automated Value (AVM) which almost always comes in low
Desk/Field appraisal review is then ordered
Make sure the appraisal is always signed off by the underwriter within a reasonable amount of time
One more thing...don't forget to wear your flack jacket in this ever changing lending environment.