What a Realtor should anticipate from underwriters
I put this post together as a suggestion from Mona Gersky. Thanks for the idea Mona.
Underwriters will very rarely have direct contact with the Realtor and will typically go through the processor or loan officer to get conditions satisfied. My job is to present the underwriter with the most complete file possible by anticipating what she will ask for and getting it to her in advance. These are some of the most important items needed from Realtor’s side to ensure a smooth transaction:
1. A complete and legible fully executed contract. Legible being the critical component. I have gotten many, many contracts that were re-faxed several times before it got to me and the end result is an unintelligible blur. I understand that it is sometimes unavoidable, but if I can’t read it you can be assured the underwriter won’t even try. Scan and email the copies back and forth if you can and if you can’t, send me a copy of the unsigned final contract prior to being faxed to use as a reference alongside the blur. Sometimes I can get the underwriter to accept it, but it will delay the process.
- A fully executed contract may seem basic, but I can’t tell you how many times I've gotten contracts with missing signatures because the Realtor was in a rush to get it to me or didn’t think it was important to give me a fully executed contract. The underwriter will kick it back and put the file on the bottom of the stack, so I won’t even bother to submit the file.
- A complete contract means complete including addendums, so please attach any and all addendums with the contract.
2. I take great care in reading the contracts before submission but I am not a Realtor and may miss a piece of critical information within it so it is always helpful for you to point out any potential issues like unrecorded easements, zoning irregularities ie; non conforming legal, well water test requirement, bodies in the basement that need exhumation or anything unusual that may hinder or potentially delay the process.
3. Please contact me during or BEFORE the negotiation stage so we can coordinate a strategy based on the buyer’s financial limitations. You would need to know the buyer may not have enough cash to close or may need a certain level of reserves to meet the approval requirements so the closing costs and/or pre-pays as well as escrows may need to be included in the negotiations.
4. Whether you think it’s important or not, please provide the termite letter as some underwriters are asking for it on every deal.
5. Let me know if there is anything unusual or deficient about the house that may come up in the appraisal. Things like handicap provisions built into the house, peeling paint, broken windows, an unrecorded addition or recent addition, in-law suite, more than one kitchen, no access to basement through the house, water stains from leaking roof(old or new), missing handrails, missing sheetrock, etc. Some of these are deal killers and others just need to be addressed in advance.
6. Is the house on public sewer system or septic? Some states require the septic system be tested and certified prior to transfer and the underwriter will ask for it.
7. Most of all, I will ALWAYS take your call or call you back promptly so please do the same for me. I’m not calling you to chit chat, but to relay a piece of information, convey an issue with the file or ask a specific question. Sometimes that piece of information is critical to the deal and cannot move forward without it.
8. If it’s a condo, I need the condo management company’s information to order the questionnaire and bylaws. More often than not, they are difficult to work with and I may ask your help to get me the paperwork I need. Most will also charge for providing the required information so you need to work that out with the seller’s agent in advance because I will not pay for it.
9. Before we get started, let me know if the condo complex is FHA, USDA or Fannie Mae approved so I’ll know how to structure the deal or if it can be done at all. It would also help a great deal if you know the investor concentration.
10. In order for me to disclose to the buyer I need to know who is the title agent/attorney you are using for this deal to establish their fees. The new GFE is binding so I need to be accurate. If there are any changes to be made after I disclose, I have to wait 3-7 business days to re-disclose (depending on the situation) or wait to close the deal. I've found some small title companies are reluctant to issue a preliminary HUD. If you can, let the title agent know I’ll be calling to avoid delay. The file does not go to the underwriter without a complete signed disclosure packet.
11. Let me know if there is something about the buyer I should know about so I can deal with it accordingly. There’s nothing worse than getting blindsided.
12. Don’t get mad at me when the underwriter approves the file with some silly conditions. If I’ve come to you looking for that condition, it means I’ve already verified the guidelines, discussed it with her and her supervisor and there is no alternative. Underwriters are under a lot of stress since a big part of their job hinges on their default rate long after the deal closes, so you know they will pick that file apart no matter how clean it is. It’s just a sign of the times.
It all boils down to simple communication and cooperation on both sides. I promise you will let you know the status of the application every step of the way and if you let me know the status and projected time line of milestones along the way I can plan for it and we can both ease the buyer’s mind.
My job is to remove as much of the stress from the process as possible by properly qualifying the buyer, ensure the buyer will be approved by uncovering all the potential pitfalls and dealing with them in advance, present a clean file to underwriting and above all make you look like a superstar to the buyer so he can tell everyone how wonderful we both are.