I'm in the middle of refinancing my mortgage and am getting frustrated. I gave the lender everything they asked for, but every week it's something more! Why didn't they just ask for it all at once?
"Something's come up"
There are often good reasons for needing additional documentation. For example, an undisclosed debt popped up on one applicant's credit report. He said the obligation belonged to his ex-wife. This triggered a request for his divorce decree proving that the divorce court judge had assigned the debt to her, and canceled checks from the ex showing that she did make those payments.
In another case, a borrower had indicated that he planned to use money in a mutual fund for his down payment. Accordingly, the account was verified. However, he changed his mind, and sold a baseball card collection instead. Underwriters needed to know that the down payment was not borrowed, so he had to document that he had possessed the collection, its value and the sale--the day before closing!
"But wait, there's more"
Eleventh-hour requests can also be triggered by inquiries on credit reports. These days, lenders are required to pull a second credit report right before closing. If new inquiries turn up, the underwriters need to know about any new accounts before your loan can be funded. You'd have to document the new credit and its terms or prove that you did not get a new account, probably by showing a letter denying your application for credit.
"We made a mistake"
On the other hand, sometimes you get last-minute or burdensome documentation requests because someone made a mistake. One client made her living in sales, which should have triggered a request for tax returns and not just pay stubs. That's because salespeople often have a lot of expenses that they deduct; these need to be subtracted from their income for underwriting purposes. So the underwriter asked for tax returns and the borrower was irritated.
The bottom line? The lender should be prepared to tell you why additional documents are required and what underwriters are trying to verify. If your loan officer can't or won't do that, you may want to find another lender. You can get mortgage quotes online and find the best mortgage rates in your area.