One Thing Leads to Another
It just may be the most frustrating aspect of the home loan process for both borrowers and their real estate agents. We, the mortgage originator, ask for a specific item, or "condition," required for the loan approval and then upon receipt and review of that item, we come back and ask for something additional. Wash, rinse, repeat. One thing leads to another.
Sure we all get why there's grief and consternation associated with this phenomenon. After all, it feels like a vendetta. It can get personal. I've had, on very rare instances, borrowers tell me that they simply refuse to provide a certain item and I know there is a sensitive motivation behind it. But I believe that if we all, collectively and conceptually, understood what drives our industry, we'd have a better sense of how to work together in the spirit of an efficient loan process. So I'm going to let you in on a secret about what makes the loan business tick.
In short, the reason for all the fuss is that your loan will likely be "sold." And the place in which it will be sold is called the secondary market. Now when a loan is sold on the secondary market, the buyer is simply looking for the facts that make the loan "saleable." Because the mortgage has likely been restructured as a security, a purchaser is not going to be getting into the nitty gritty of the borrower's situation. They don't know, and don't care, about "the story" behind the bank statements, the tax returns and any other documentation. They don't care about the rapport that we had when we worked closed together for 30 days to put you in your dream home and they don't grasp "common sense." So, maybe an analogy would help.
Let's say you choose only to buy organic meat. You go into a market and you look for the label that says "Certified Organic." If the package doesn't have that label, you don't buy it. You won't ask the butcher why the meat didn't meet the organic standard. You won't know that on only one day out of the year the cattle rancher slipped up and fed his cattle feed that didn't meet organic standards. Nope, none of that will matter. No sticker, no purchase. And that's sort of the way our industry treats the end loan product. If we can't, through all of our guidelines, regulations and representations, put a "Saleable" sticker on your loan, it is going to stay on our books. And when that happens a domino effect of bad things follow. Less availability of credit, higher costs, stricter guidelines. Everybody loses.
Now we don't expect our clients to be martyrs for the next guy. We try to eliminate required items up front and there are a lot of best practices that help us do so. But remember, if you're in the loan process and being asked for additional support, it's not because we're trying to make your life difficult, instead we're trying to help your loan find a home in the secondary market of the future, just as you're trying to find a home in your local market today.
Reach the beach,
Robert J. Spinosa
Vice President of Mortgage Lending
Marin Office: 324 Sir Francis Drake Blvd., San Anselmo, CA 94960
Berkeley Office: 1400 Shattuck Ave., Suite 1, Berkeley, CA 94709
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