Lenders Deny Approveable Files (all the time!!!)
The inspiration for this post comes from an online professional forum where industry pro's go with complaints, rants, questions, and more. Today, someone expressed bewilderment because their loan file was declined by a lender because of recent derogatory credit information (the culprit: 2 30-day lates on student loans in the past 12 months). 
This loan officer ran desktop underwriter (automated underwriting that issues approvals for conventional & government loans) and got every loan officer's favorite results - approve/eligible (meaning it's approved as the system likes the loan's attributes, and 'eligible' meaning that is meets requirements for the specified loan program so it can be delivered to Fannie/Freddie/Ginnie). Once the file hit the underwriter's desk, it came back declined.
HUH!?
Basic rule of automated underwriting is "garbage in/garbage out" so if the file is structured properly and the information submitted accurately, the 'approve/eligible' should mean you have a 100% fundable loan.
Unless of course, you're working with a lender that has overlays. In this case, the lender doesn't want late payments within the past 12 months - whether they can approve the file or not, they won't because of their overlay. This is an approvable file, that the lender won't approve, and this happens -all.the.time.
The simple solution to making sure things like this don't happen? Work with 1) a knowledgeable loan officer that knows their guidelines (the loan officers mistake here is that they SHOULD have known this overlay prior to submitting the file to that investor), and 2) a lender that has "agency direct" programs. I can't state this enough. Overlays are deal killers, and at the very least, are going to cause delays that make buyers and sellers miserable and stressed during what should be a happy time. As a real estate agent, you're asking for trouble and additional stress if you're referring clients to lenders that have overlays like this.
Approveable files should be approved. Simple as that. That said, there are a TON of gray areas in lending - things like variable income, recent job changes, questions about potential occupancy, etc, can all throw a wrench in the process - but a good loan officer knows how to package a file to maximize good results. A good analogy is an attorney preparing a case for a judge. A good attorney is going to put their client in the very best light by researching and building a case before a judge sees anything. If the case is good enough, a judge is far more likely to rule in their favor.
Don't let an overlay kill or delay your deal. Improve customer service, streamline the real estate transaction, and work with a lender that has agency-direct products (like me!).
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