It’s called loan processing for a reason....financing real estate with a mortgage loan is a process, not a one step event.
We have all heard a consumer or real estate agent bemoaning the fact that their loan officer is asking for another piece of documentation, another letter of explanation, the updated statement of their checking account or their latest pay stubs. Or, the underwriter wants further clarification on their employment or credit history and another comparable on the appraisal.
Getting a mortgage in today’s market involves everyone in the process dotting each and every “i” and crossing each and every “t” (yes, some are calling it “CYA...cover your you know what...lending). It can be a challenging and, in some instance, test the patience of Job. I get that......
I have always operated my business with the approach to be as absolutely thorough at the onset of originating a mortgage as possible. What that means is that I do not ask for the bare minimum of documentation to get a preapproval, but for the whole enchilada.
In other words, I evaluate the consumers needs and discover as much as possilbe about their specific situation....then I put on my underwriters hat and attempt to determine EVERY piece of documentation the underwriter may request. The rationale is (and I have found to be true) that consumers are happy to comply on the front side of beginning the loan process, but completely resent being “nickle and dimed” for piecemeal documentation.
Getting a mortgage is intrusive and invasive...only a true masochist would enjoy the process! But, playing a game of documentation “strip poker” by forcing a consumer to strip away his/her privacy one piece of paper at a time is just plain rude.....and, extremely frustrating. Much better to strip immediately and get the embarrassment behind you then to sit there in your skivies waiting for the next roll of the dice!!!
Having clarified that I believe it is imperative for a mortgage professional to be absolutly thorough from the very onset of a introduction to a potential client, it is equally imperative that consumers and real estate agents understand to getting (funding) a mortgage loan is a PROCESS that is much like legal discovery in the legal system.
There are simply things no one in the transaction know at the beginning of the loan process. This becomes glaringly clear as the process continues. Usually, the request of additional documentation can be justified and explained to the consumer (and, if necessary, the buying and selling agents involved) to ensure the transaction moves along smoothly.
However, there are at least two instances that create havoc for all parties involved in the loan process.....and, both of them stem from the desk of the loan officer:
1). And, in my opinion, the worst of the worst...Number one, is the loan officer that skims the surface of the interview process, asks very little of the consumer, but does a masterful job of “selling” his/her service. The consumer has bought the “sizzle” of the steak, but will be dining on shoe leather in this transaction.
2). Inexperience or lack of knowledge of the COMPLETE lending process. I am not being simplistic to state that a fifth grader could fill out a 1003 (loan application). For goodness sake, the “blocks” tell you what to put in every space. Name here, social there, date of birth...it is very much like a “paint by number” kit. Fill it out according to the directions and all should be good, right?
NOT!!!! Between the “blocks” of the 1003 are all the cracks in the mortgage process (like banking compliance, investor guidelines, real estate law, escrow or attorney requirements...the list goes on and on).
OH, and you want to know the NUMBER ONE complaint about loan officers from underwriter????? “WHY CAN’T THEY FILL OUT A COMPLETE APPLICATION?” (It’s true, folks, at the wholesale level it is very realistic to state that 1 in 10 (if that) applications are completed with enough information for the underwriter to make an informed decision on the file.
The “discovery” period of the finance process can be less painful and intrusive IF the loan officer is thorough at the point of origination AND can adequately and completely explain the “WHY” of the request from the underwriter/closer/funder...or anyone associated with the loan.
As a loan officer, knowing the “WHY” is just as important as knowing the “WHAT” in the documentation of a loan file. Knowing “WHY” enables me to HELP the underwriter come up with the “HOW” to make the exception or to make a substitution of specific documentation.
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