a little peek at (underwriters)... give this some thought.

By
Mortgage and Lending with Fairway Independent Mortgage Company 385907

I've been a Loan Officer for a long time, it seems that I started somewhere just after electricity was discovered. So needless to say I've seen a lot, and yet some things strike me differently still

like I'm seeing them for the first time.

I just submitted a loan package, for a first time homebuyer, and after a processing review, which included a checklist of 66 items, the file was sent to the underwriter for an initial review.

that's how we do it. we like to get the file to the underwriting department, fast.

The processor as a courtesy forwards a copy of the complete package to me also.

the "complete" package

155 pages...yup 155 pages

okay so about 45-50 pages are just disclosures, but

the rest include;

3 years of tax returns (all pages), 3 years of W2's, 2 months of bank/asset statements (all pages), tax transcripts, appraisal, case # ordered, geotrack, flip check, fraud report, flood cert, DU, contract, and more...a lot more

now here's the fun part.

as a loan officer I have collected a great deal of these documents, but I have met with the client, and I have been able to ask questions, and I have established a bond with my clients, but the underwriter

they haven't had the opportunity to do any of that, and in all likelihood they will never have any direct contact with the client.

they're seeing this information, for the first time 

now, after reviewing all of these documents they have some questions. They come back to the processor as needs/conditions.

here's a question for all of you.

If you had never spoken with, been introduced to, or had any contact whatsoever with the applicant, and you received a application package consisting of 155 pages, what do you think would be a fair amount of questions/needs/conditions?

psst remember now, this is a first time homebuyer (not perfect, as you may assume)

here's another question.

they want to borrow over $113,000. If it was your money and/or your decision, what do you think would be fair?

on the average, and my expectation is that I will get 15-20 items either requesting documentation, or some sort of clarification. Usually they are split, pretty evenly, although not always, between items directly involving the buyer, and work needed to be done by the processor, and or loan officer. and actually I think

that's not bad...considering

so that's just a quick little, uncomplicated look at what an underwriter does, so next time things are taking a little longer than we'd like, just sit back for a moment and

give this some thought

 

 

 

 

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Rainmaker
364,088
Linda De Fusco
The De Fusco TEAM Keller Williams Arizona Realty - Scottsdale, AZ
The Arizona Rainmaker

I still perceive that the guidelines have swung too far. We all shared the error of judgment in the 05 06 years. Some of these "requirements" right now,  are over the top and I've detected in a few cases, ego driven. They, the underwriters, are not funding that 113,000 loan, an investor is...one that is in the business to lend for profit. It is time for our lending guidelines to settle in to the current market conditions. Running, stating the world is ending is not current events, but the past, IMHO.

Jul 30, 2013 10:51 AM #7
Rainmaker
400,017
Mitch Muller - Charlotte NC Real Estate
ProStead Realty Charlotte, NC CRS SRES mitch@prostead.com - Charlotte, NC
Certified Residential Specialist

Jay, you make some good points. There's no question though, the industry has made a 180 degree swing and maybe just a little too much. I'm starting to see "some" lenders backing off a little.

Jul 30, 2013 11:25 AM #8
Rainer
285,969
Jimmy Faulkner
Florida. Homes Realty & Mortgage - Wantagh, NY
The Best Of St. Augustine

We are living in the New World Order that WE have ACCEPTED without a wimper. With no constitution to protect us more will come for us living in America. We keep voting in the same people (IF we vote) so the outcome is going to be a disaster. We did it to ourselves.

Jul 30, 2013 11:39 AM #9
Rainmaker
1,143,521
David Shamansky
US Mortgages - David Shamansky - Highlands Ranch, CO
Creative, Aggressive & 560 FICO - OK, Colorado Mtg

It never fails that unless you deal with this on a daily basis you truly may get a time frame but also don't fully understand it or the process involved, especially in todays, fed only lending environment.

Good post

Jul 30, 2013 12:40 PM #10
Rainmaker
609,642
Bill Reddington
Re/max Southern Realty - Destin, FL
Destin Florida Real Estate

Mortgage world is an interesting place anymore. It is not easy. Seems if you miss the dot on an i the file is kicked back. Hope it gets better.

Jul 30, 2013 02:23 PM #11
Ambassador
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Ralph Gorgoglione
Maui Life Homes / Metro Life Homes - Kihei, HI
Hawaii and California Real Estate (800) 591-6121

Thanks for giving us all an inside look at what the underwriting process looks like from the inside. Now we all have a greater understanding and appreciation for this very important job.

Jul 30, 2013 03:02 PM #12
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3,671,692
Jeff Dowler, CRS
Solutions Real Estate - Carlsbad, CA
The Southern California Relocation Dude - Carlsbad

It certainly helps to have some glimpse into the process that can be so frustrating and time consuming. I wouldn't want the job for sure.

Jul 30, 2013 03:28 PM #13
Rainmaker
1,046,826
Sharon Parisi
United Real Estate Dallas - Dallas, TX
Dallas Homes

The underwriting process is definitely frustrating to buyers. Many do not fully understand the purpose of the documentation.  You have done a great job of demonstrating the purpose!

Jul 30, 2013 04:05 PM #14
Rainmaker
615,446
Jane Chaulklin-Schott
TEAMCONNECT REALTY - (407) 394-9766 - Orlando, FL
TeamConnect Luxury Homes - Orlando, Florida, 32836
Have often wondered why everything seems to go to the Underwriters in the last couple days before the scheduled closing. And after reading your post and the 155 pages the Underwriters review, I believe I will worry even more.
Jul 30, 2013 04:54 PM #15
Rainmaker
351,154
John F Muscarella
RIVER FARM PROPERTIES, LLC - Venice, FL
Broker/Owner, Venice, FL, Florida's Suncoast

I don't underestimate the underwriter or process too much.  WHat I do get frustrated with is the losing of docs or information that has been sent multiple times and requests for information that are not pertinent to the deal or the borrower or just ridiculous.

Jul 30, 2013 09:26 PM #16
Rainmaker
281,344
Jay Beckingham
Fairway Independent Mortgage Company - Delray Beach, FL
Seniors ROCK!

Linda,

it's also the investors who are setting the guidelines, they are the ones adding the overlays, essentially guidelines on guidelines. if the underwriters do no enforce these guidelines the loan is not saleable. in the old days when I first started we used to tell people if we could not sell the loan into the secondary market we couldn't do the loan. to quote Yogi, it's deja vu all over again.

Mitch,

I agree, lenders are extremist, too far to the left then too far to the right, where's the middle ground?

Jimmy,

the new world order you speak of, in regards to mortgage lending looks a lot like the old order. the guidelines are as conservative as they are traditional.

David,

thanks, I think that the loan officers have a greater responsibility to prepare all parties for the fact that we are in a "documentation intensive" environment.

Bill,

two or 3 dots for that I and two or three crosses for that t.

thanks all

jay

Jul 30, 2013 09:45 PM #17
Rainmaker
1,450,180
Sandy Padula and Norm Padula, JD, GRI
Realty National - Carlsbad, CA
Presence, Persistence & Perseverance
Jay, the underwriters have been getting ridiculous with questions that have never been asked before and makes me question hat relevance they have to the loan package. It really makes the potential borrowers AND me question whether the banks really are in the mortgage business any longer.
Jul 30, 2013 09:51 PM #18
Rainmaker
281,344
Jay Beckingham
Fairway Independent Mortgage Company - Delray Beach, FL
Seniors ROCK!

Ralph,

you're welcome. as much as part of my responsibility is to challenge (when necessary) and assist with the conditions I've got to respect the work that the underwriters do under a great deal of pressure. 

Jeff,

there's not enough $$$, well maybe there is, but it would take a lot to get me to do that job.

Sharon,

I think the loan officers need to spend a little more time, up front, preparing the applicants for what will be needed, and to expect the requests for additional documentation.  

Jane,

it's the additional requests for information that all come at the end. Clarification of the original documentation and supporting documentation, answering underwriters questions and satisfying their concerns. we're back to the loan officer preparing you and the applicant that this is going to occur.

John,

there's so much documentation handled by multiple persons that some will get misplaced, or buried in email systems somewhere. what's pertinent is an underwriters call. I agree sometimes it doesn't appear relevant, but I don't have the complete file that they have.

thanks everyone,

jay 

 

Jul 30, 2013 09:57 PM #19
Rainmaker
256,236
Joyce Godwin, Realtor, CRS
RE/MAX Elite Properties; Serving Cypress, Spring, Tomball, NW Houston - Houston, TX
RE/MAX Elite Properties

I don't find fault with underwriters who want to do whatever is required to do a complete and thorough job.  However, I do think they should be required to get it done on time by the closing date in the contract OR let everyone know before the 11th hour that it is going to take longer.

It's not at all unusual for an underwriter to decide they need more time and then let everyone know a day or two before the scheduled closing (that they have known about all along).  They don't seem to care that the seller may have to reschedule closing on their next home (maybe lose that property because of the rescheduling, especially if it is the third time), reschedule movers, reschedule utilities, schedule ANOTHER half-day vacation at work and on and on.  They don't seem to care that the seller may have leased a home or apartment so they can be out by closing, according to the terms of the contract, and turn keys over to the new buyer - so now they may be paying the mortgage plus rental somewhere. These things can all cost the seller money, which starts to change what the seller agreed to when he signed the contract.  If the underwriter needs something, they shouldn't be allowed to dream it up in the 11th hour.  A recent excuse was that they were just very busy and backed up (well, we're ALL busy).  Another one came up with the excuse that the underwriter was new and just trying to do a good job - that's great except that it cost the seller a couple thousand dollars and a lot of antagonism.  Both of these instances almost cost the buyers the property - after they had spent money on inspections, appraisals, earnest money, option fees, time off work , etc.  

Maybe like everything else, a few bad underwriters paint a bad picture for the others that ARE doing a good job.  I do think there are some good underwriters, but I think there are some inefficient underwriting COMPANIES as well.

If you have suggestions as to what to ask of the mortgage person, I would love to know how to eliminate the "eleventh hour scramble."

Jul 30, 2013 10:06 PM #20
Rainmaker
281,344
Jay Beckingham
Fairway Independent Mortgage Company - Delray Beach, FL
Seniors ROCK!

Norman,

we have a lot of buyers bringing issues to the table that were either very rare or non existent in the past.

I also look at some of the guidelines, particularly the overlays, and just shake my head.

Joyce,

an underwriter who is working on 20-25 files at a time, or more, can't coordinate all of the closing dates to fit your needs. to me that means the mortgage "team" is failing you if you are constantly running into these problems. by that I mean starting with the loan officer & processor, as to making the underwriter aware of the situation and needs 

I don't believe though that the "eleventh hour scramble," as you describe it, will ever totally disappear.

thanks

jay

Jul 30, 2013 10:38 PM #21
Rainmaker
704,608
Ed & Tracy Oliva
West USA Realty - Arizona - Fountain Hills, AZ
The Oliva Team Arizona Agents

Good Morning and a great post,  keep up the good work and good luck with your business,  E

Jul 30, 2013 11:06 PM #22
Ambassador
849,220
Brenda Mullen
RE/MAX Access - Schertz, TX
Your San Antonio TX Real Estate Agent!!

I'm with Joyce in #20.  And I read your reply...however, the "mortgage team" always seems to just blame the underwriter.  It drives me batty that lenders as a whole are never held accountable to contract dates and cost buyers and sellers a ton of money and all we get is a ton of shoulder shrugging...

I think it's deplorable especially when the buyer ends up losing out and then the seller is stuck with a home they thought they were selling. 

Lender just says oh well...next..

I get that underwriters need time but the process is flawed of how the loan is put through the system.  If everyone in the loop thought of that buyer as an actual client that the "team" owed some courtesy and loyalty too, I believe the amount of loans that fall through due or extend too many times due to "time" and "needed documentation" would decrease.  Instead, buyers are thought of just a loan packet...nothing more, nothing less so when the file falls through no biggie

Just my observations. 

Jul 30, 2013 11:31 PM #23
Rainmaker
256,236
Joyce Godwin, Realtor, CRS
RE/MAX Elite Properties; Serving Cypress, Spring, Tomball, NW Houston - Houston, TX
RE/MAX Elite Properties

Jay, It's not really my needs I'm addressing - it's what the buyers and sellers are lead to believe - and I agree, 25 or 30 or more files may be hard to coordinate - that's why, from day one or at least a couple of weeks into the file, they (underwriter and/or mortgage people) should let the buyer and seller know what to expect and if their expectations are unrealistic - but let them know before it's a huge issue - it's hard for me to believe they don't have some clue before a day or two before closing that conditions and issues are still outstanding that can't be resolved by the anticipated closing date.  Communication goes a long way.  Buyers and sellers are people too and their lives can be greatly affected by an underwriter's decisions, timeframe, etc.  Unfortunately, we don't always get to pick our mortgage team.

I'm pretty sure you don't fall into the category I'm describing, but some of them can "go underground" and can't be found if they don't want to be (they won't communicate with their client (the buyer), the title company, and certainly not the real estate agents  -- all of whom should be working as a team).  When they do finally call, they've just been very busy (as if the rest of us weren't).   We all schedule around the closing date and block off time for it.  As a courtesy, in my opinion, it really wouldn't hurt for the mortgage team to communicate with the rest of us.

 

With all that said, I've worked with some fantastic "mortgage teams" and wish they were involved in all my closings.   I'm pretty sure you would be in that category rather than the one I'm griping about.  Any suggestions as to what an agent could tactfully request of a mortgage group to help avoid surprises?

Jul 31, 2013 01:27 AM #24
Rainmaker
281,344
Jay Beckingham
Fairway Independent Mortgage Company - Delray Beach, FL
Seniors ROCK!

Ed & Tracy,

thank you. good luck to you also.

Brenda,

you may not like these answers but,

you should see some of the contracts that are written and the commitment and contract dates (actually I bet you do). at times I have to explain that you get a commitment for a loan before you close and not after.

I don't know who you deal with but you need to find someone you can trust and who cares. I don't believe that all lenders act as you have stated, but I do agree that some do.

Joyce,

there are some difficult issues, particularly what I can and cannot disclose to 3rd parties, particularly listing agents and sellers. the strongest suggestion is that the buyer provide all documentation as soon as possible. many times they wait till the last moment, and the documents provided may cause additional problems.

the mortgage process is a difficult system, and it works best when everyone works together.

 

thanks,

jay

Jul 31, 2013 01:52 AM #25
Ambassador
849,220
Brenda Mullen
RE/MAX Access - Schertz, TX
Your San Antonio TX Real Estate Agent!!

Jay,

Had to come back and say I have worked with some outstanding lenders that do not fall into this category.  Most of the time these are buyers that chose their own lender or I am the listing agent and working with an inexperienced buyers agents.

So, this is only for those that have caused me and my clients grief lol..

But I do notice that there is NO accountability for a lost loan to the lender (except that perhaps you don't get paid..not sure).  But if a contract falls through and a buyer loses their earnest money because of delays and document issues right before closing, this is just unacceptable in my opinion. 

If an agent drops the ball, then we have a ton of accountability but lenders just move on.  Most of my contracts are written for closing at least 30 days out.  As far as financing goes, it's not unreasonable to expect a buyer is fully qualified in 15 to 20 days...this means they have done most of their homework BEFORE writing a contract and put all the docs together and get them into the lender (at least when I am the buyers agent), excepting of course appraisal issues.  I stay on top of my buyers like crazy and my lender...

I completely agree that everyone needs to be in the communcation loop; however, with the events I have described, once stuff starts going South then I find I can't seem to get a hold of anyone for answers...drives me nuts.

Again doubtful it's you and I have worked with plenty of mortgage teams that this doesn't happen with..but the ones who do...geesh.

Jul 31, 2013 04:17 AM #26
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