'COMFORT LETTER' MAY SMOOTH LOAN PROCESS

DEAR DAVE: My employer was nice enough to give me a full year off of work when my husband and I had our first baby in April of last year. Now I am back at work and we want to buy our first home, but the bank is giving us a hard time because I was out of the workforce for an entire year. I explained to the loan officer the reason for my absence, but he won’t approve the mortgage unless I put the whole thing in writing and also obtain a letter documenting my situation from my supervisor. Is this typical?

ANSWER: Yes, it’s a fairly typical request that lenders make when one or more of the loan applicants has been out of the workforce for an extended period of time. Often called a “comfort letter,” it helps to explain long absences or other issues that may not be addressed in a basic credit report.

A one-year absence doesn’t really seem to be long enough for the bank to demand a comfort letter, but each lending institution sets its own rules. Such requests are more commonly made if, say, there was a much longer gap between jobs—perhaps because an applicant went back to college for a few years or wanted more time to raise a growing family.

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REAL ESTATE TRIVIA: JPMorgan Chase, America’s largest lender, earned a staggering $8.7 billion in the first three months of this year. That’s the largest quarterly profit of any U.S. bank in history.

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DEAR DAVE: My wife and I recently rented a new apartment. When we did the final “walk-through” with our landlord, the landlord had a small video camera and videotaped everything, up to (and including) the kitchen sink. We didn’t want to ask her why she was doing this, so we thought we would ask you: Was this really necessary? It seemed a bit odd.

ANSWER: No, it’s not really odd. A small but growing number of landlords are using camcorders or similar devices to document the physical condition of a home shortly before a tenant moves in. This often helps to avoid a lawsuit or other problems when a tenant later moves out but the landlord wants to keep some or all of the initial security deposit to cover any damage that was caused during the tenancy.

Tenants can do the same thing. If they do, they should take wide shots that show each room in its entirety, then zoom-in for close-ups on any defects—such as a tear in the carpet, water stains on the ceiling, or tiles that have been chipped or cracked. It’s best if the images are stamped with the time and date that they were taken.

The tenant should then send a copy of the video to the new landlord so each has documentation of the home’s condition on move-in day. Again, it can reduce the chance of a dispute arising at move-out and improve the tenant’s chances of getting most or all of the security deposit returned.

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Our booklet, “Straight Talk about Living Trusts,” provides the information readers need to determine whether forming an inexpensive trust would be a good idea based on their individual circumstances. For a copy, send $4 and a self-addressed, stamped envelope to D. Myers/Trust, P.O. Box 4405, Culver City, CA 90231-4405. Net proceeds are donated to the American Red Cross.