Shmuel Shayowitz (NMLS#19871) is President and Chief Lending Officer at Approved Funding, a privately held local mortgage banker and direct lender. Shmuel has over two decades of industry experience, including licenses and certifications as a certified mortgage underwriter, residential review appraiser, licensed real estate agent, and direct FHA specialized underwriter. Shmuel provides a uniquely holistic approach to comprehensive real estate and financial matters that goes well beyond any single transaction. Shmuel is an award-winning financier recognized for maximizing the short-term and long-term objectives of his client. As a contributing writer to many local and regional newspapers and publications, his insights have been featured in the media for many topics, including mortgages, personal finance, appraisals, and real estate trends.

As we all know, Jews across the globe gather the “Four Species” – the Esrog (Citron), the Lulav (Palm), the Hadas (Myrtle), and the Aravah (Willow) – which they use conjointly to celebrate the holiday of Succot. There are many basic and Kabalistic explanations for this custom. The one that I have always enjoyed is the one that compares each of these species to a part of the human body.

The Esrog represents the heart of a human; The myrtle has leaves shaped like an eye. The palm represents the spine; The willow represents the lips. The four species must be taken together as a harmonious unit. So too, to achieve true service of G-d, one must use all of his faculties in unison. One cannot ‘say’ one thing and ‘feel’ or ‘do’ another. We must unify our feelings, our actions, our speech, and our perspective to all be in synch towards the same mission.

On Succot, we have had the four species, on Pesach, we have the four questions, and in mortgage banking, we have “the four C’s of mortgage qualification.” These are the four key characteristics that a lender evaluates in order to underwrite, and ultimately approve a mortgage loan.

The Capacity to pay back the loan. Lenders look at your income, employment history, savings, and monthly debt payments, such as credit card charges and other financial obligations, to make sure that you have the means to take on this size of a mortgage securely. When a lender refers to “debt to income” qualifications or “ratios,” they are referring to this component of the loan evaluation.

Lenders consider your Capital – readily available cash on hand or savings, investments, or other assets that could be used towards the loan, or as reserves. Having excess reserves proves that you can manage your money and have funds, in addition to your income, to pay the mortgage. Obtaining gifts or loans can show that one depends on funds from elsewhere, which might restrict certain program eligibility.

Lenders take into account the value of the property as security against the loan. This collateral is used as a determining point as to how much a lender will lend as a percentage of a loan towards value. When a lender refers to “loan to value,” it means what percentage of the amount they will loan against. Conversely, an 80% loan to value means a home with 20% equity.

Lenders check your credit score and history to evaluate your record of paying bills and other debts on time. They follow a strict FICO scoring model, which determines many of the eligible loans and programs that are available to a given borrower.

I was thinking that perhaps each of the symbolic human components of the species can be associated with “extending credit” in mortgage banking. The ‘eyes’ – to make sure that a person doesn’t have ‘big eyes’ and does not overextend themselves by buying a home outside of their affordability. The ‘lips’ – to confirm that the mortgagor fulfills the payments they have pledged to make in the Promissory Note and Loan Agreement. The ‘heart’ – to safeguard they have proper intentions and have made only true representations in the loan application. The ‘spine’ – to guarantee that they have the backbone and means to honor their financial commitments. Just a thought…

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