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Is the Mysterious loan underwriting process a standard process, or does it vary from bank to bank?

By Ralph Gorgoglione

Real Estate Broker/Owner with Metro Life Homes RS-78439 / BRE #01708344

May 14, 2010 04:31 PM

Is the Mysterious loan underwriting process a standard process, or does it vary from bank to bank?

How many times has your escrow gotten a little bumpy due to the buyer's underwriting process?

FHA calls out new documentation requirements?

A problem with the Homeowner's Association on the property not meeting the underwriter's guidelines?

The buyer's Verification of Employment not adequate?

So many factors that can come up.

The underwriting process is one of the more mysterious processes of the escrow.

Listing agent, and in most cases even the buyer's agent are not privey to the unerwriter's process and very often something just jumps out that leaves us scrambling to try and meet with the underwriter's guidelines.

What are some of your underwriting episodes you can share?

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Vickie Nagy

Coldwell Banker Residential Real Estate - Palm Springs, CA

Vickie Jean the Palm Springs Condo Queen

There are some doozies out there. The mystery that keeps occuring is the missing documentation. Name the document, it's missing.

May 14, 2010 04:34 PM

Maria Morton

Platinum Realty - Kansas City, MO

Kansas City Real Estate 816-560-3758

Underwirters are kind of like 'the man behind the curtain'. Even the loan officers don't disturb the underwriters unless absolutely necessary.

May 14, 2010 04:35 PM

Glenn Roberts

Retired - Seattle, WA

Ralph, I've found that if you have an excellent loan rep, he knows what the underwriters want and it is all taken care of long before there is a problem. A bad loan officer puts these things off until late in the game and that's when problems show up. When it is your listing we're talking about, try to ask specific questions that the loan reps would need to talk to the underwriter about. Such as "Has the underwriter seen the appraisal yet? What did he say?"

May 14, 2010 04:37 PM

Sharon Alters

Coldwell Banker Vanguard Realty - 904-673-2308 - Fleming Island, FL

Realtor - Homes for Sale Fleming Island FL

Doozies? We've had some lately.

#1 The day before closing, we learned the loan would not fund until 72 hours after settlement. What? With much pressure and angst and many phone calls, the loan funded on Monday morning after the Friday 'dry closing.' The reason? We were told the loan was sold in a batch prior to settlement because they were so sure it was going to close....my Wells Fargo guy said it was because they had to get the money from a warehouse and someone messed up along the way.

#2 A+++ buyers were notified a couple of days before closing that they had to verify that they had paid their taxes. Why does this wait until the last minute for verification? It delayed the closing almost TWO weeks. Luckily, the Sellers were gracious and didn't have another closing in the works to complicate things. No domino effect here but what gives?

Say Ralph, thanks for the rant vent. I feel better now :)

And the moral to this story? Use lenders you know and trust. In both cases, these were lenders we did not know.

May 14, 2010 05:31 PM

Matt Grohe

RE/MAX Concepts - Des Moines, IA

Serving the metro since 2003

I think if an originator doesn't know what's going on they just blame underwriting.

May 14, 2010 05:55 PM

Kerry L Klun, Broker/Owner

Palm Realty - Melbourne, FL

321-626-5868

Conforming loans are just that. Mortgage companies can come up with different marketing strategies but if they are selling conforming loans, they are really that drastically different.

May 14, 2010 06:07 PM

Elite Home Sales Team

Elite Home Sales Team OC - Corona del Mar, CA

A Tenacious and Skilled Real Estate Team

Truer words were never spoken, "in most cases even the buyer's agent are not privey to the unerwriter's process."

May 14, 2010 07:40 PM

Richard Weisser

Richard Weisser Realty - Newnan, GA

Richard Weisser Retired Real Estate Professional

Ralph...

I think a lot of this is perpetrated by the investors that are buying the paper. We see some strange ones!

May 15, 2010 04:14 AM

Donne Knudsen

Los Angeles & Ventura Counties in CA - Simi Valley, CA

CalState Realty Services

Ralph - OY VEY! Where do I start? While I'm not going to sit here and say that all the Realtors who have commented don't have some valid complaints, I will say though that unless you are actually an MLO doing loans everyday as your primary occupation, blaming the MLO is a cheap and easy shot.

While there are still a lot of lazy and inexperience MLO's out there operating, there are also a lot of experienced, hard-working and conscientious MLO's who are running into some of the same experiences.

To answer your question; nothing about the underwriting process these days seems standard anymore because guidelines are changing pretty frequently and overlays vary from lender to lender. I discovered quite some time ago that my smaller, local correspondent lenders are not as difficult and stressful to work with than the large, national wholesale lenders and don't even get me started on the large, national retail banks - they're the worse.

I've recently written about underwriting problems and they can run the gamut from the newbie and contract underwriters who don't know their own guidelines and start asking for stuff that is not required by the lender and/or program to changing guidelines during the process to changing borrower circumstances or discovered property/seller issues all of which will always cause hiccups in the process.

So, I just ask that before throwing the MLO under the bus and blaming them for everything, try and find out if there are other issues going on because the underwriting process isn't all that mysterious and as many commented, working with an experienced and knowledgeable MLO who you know, trust and respect can make many of these issues less stressful. JMHO

May 15, 2010 05:14 AM

June Tassillo

Owner/Broker RE/MAX Elite Realty - Franklin, NC

Let me help you with the next phase of your life!

Ralph ~ My lastest was we needed a water test and gallons per minute. I did the water test myself and took it to the health dept. and the sellers got a plumber to do the well's gallon per minute. I can see a water test but what was up the the gallons per minute? At least I was told a week before closing so it did get done. I enjoyed reading some of the others last minute episodes.

May 15, 2010 08:03 AM

Anonymous

John

My closing has been delayed a week already and I'm not happy. (I will refrain from using bad language). No one told me when any paperwork had to be submitted, but everyone assured me we could close on May 28th. Now, everyone is blaming me for not having my paperwork turned in on time. I submitted the application 3 weeks before closing. Then all the requests started rolling in. I had to call the IRS twice, not once, to have them FAX transcripts of my tax return because someone LOST page 6. My HR department had to submit a letter confirming my employment, salary, and I was being transferred. They had to have a copy of my settlement statement from the closing of my former property. WHY? All I get in response is they need it. OH yeah, because my HR department did not send ALL the info on a single letter head, they had to REDO it. Right now I think everyone from my real estate agent, loan broker, all the way to the underwriter are all unprofessional to say the least. There is NO transparency in this process. Even my appraisal was delayed over 7 days because it was ordered, but nobody could tell us who had it. It had to be REORDERED. I'm sick of living in a hotel. Even though I did recieve the early occupancy agreement, i'm not going to use it because I'm about to walk away from this deal because of this sickness to my stomach over the whole process.

Jun 04, 2010 05:33 AM

#11

Ralph Gorgoglione

Metro Life Homes - Palm Springs, CA

California and Hawaii Real Estate (310) 497-9407

John,

Sorry things have not rolled out the way they should.

What city do you live in?

Jun 04, 2010 10:25 AM

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