I took a Realtor class today called “What you need to know about today’s changing mortgage market” and left with knot in my stomach. Among other things, I learned that the Loan Quality Initiative (LQI) recently launched by Fannie Mae is an attempt to police the loan application process. The LQI requires checks and re checks of bank statements, pay stubs, credit scores and credit reports as well as owner occupancy after the closing. Not a problem, usually, because most of us are honest borrowers. The problem for even honest folk is that 2 or 3 days before the closing, the lender can run your credit again. Problem? Well, if there’s any new debt showing (maybe you had to buy tires for your car or furniture for your new house) you could easily be denied the mortgage… JUST before the closing. What a mess! And since credit reports are “histories” and usually 30 – 60 days “behind” in what they report, you could have purchased your new Pirellis or Barcalounger a month and a half ago, applied for your loan, been approved, found the condo and then learn on Wed that you can’t close Friday.