When Getting a Mortgage, Do What You're Told

By
Mortgage and Lending with Mason-McDuffie Mortgage, Conventional Loans, Jumbo Loans, FHA, 203(k), USDA, VA, NMLS #138061 MMCD #1141
https://activerain.com/droplet/5qvr

When applying for and having a mortgage loan processed, one of the most important pieces of advice I can offer, is very simple:  "Do what you're told".  Exactly what you're told.  Do not deviate, and do not do what "you thought" would work.  Unless of course, you want the process to be prolonged, you have an affinity for migraines, or you're a masochist and making things painful for yourself is just kind of your thing.

 

The mortgage industry doesn't make sense (to anyone not in the mortgage industry, and even to many who are).  But with 15 years of experience helping countless borrowers with loans, I can assure you, the system capital IS, capital NOT, capital WORTH, capital FIGHTING.  The process IS NOT WORTH FIGHTING.  

 

We recently had a loan file where a borrower who needed to bring money to closing had outlined the plan for paying that money, then was incensed to discover we needed more documentation because he deviated from that plan.  He deviated from the plan because "it made sense to him" that what he sent (in lieu of what he said he'd be sending) should be good enough.

 

Well, if the $2 million bucks we were lending was coming from my wallet and being repaid to me with interest, it probably would make sense.  But it doesn't make sense to the final investor.  It doesn't make sense to the MBS market.  It doesn't make sense to the US Government which, thanks to the Patriot Act, ensures we get to play the role of special agent when it comes to looking at our customer's money.  At the end of the day, those groups make the rules, we just have to play by them.  

 

The good news is, we're really good at playing by the rules.  We know them, we know how to streamline even the most difficult of situations, and the pain points we feel on the back end of just about every loan process are rarely felt by our customers and referral partners.  BUT, when we make a plan, we've got to stick to it.  Everyone does.  

 

I'm sure there may be a masochistic lender or 2 out there that asks for things they don't need and just enjoys every loan being difficult.  We're not them.  We ask for nothing that's not needed, and our loan process is designed to get a borrower from start to finish with as little effort and time as possible.  But, everyone needs to play by the rules, and there's sadly not much room for 'common sense'.  We ask for what we ask for specifically because it's specifically what we need - the key word being specifically.

 

We make the mortgage process as easy as possible, but it's important to note that not everything makes sense.  When it doesn't, 99% of the time thta feeling comes from a "but I'm a good borrower and it's OBVIOUS I can afford this loan!".  But these days, it needs to be obvious you can afford the loan.  AND obvious that an investor cannot find anything with a fine toothed comb that would come back to bite the originator in the wallet should the market slow down and investors start looking for ways to cash in.  AND obvious to the government that there is zero chance any funds were moved between borrower accounts that are undocumented or not accounted for (because, the war on terror or something).  So while it might not seem to make sense, mortgage applicants must trust that sometimes, it doesn't have to make sense to them.  

 

Want to make life easier on yourself when getting a mortgage?  Here's a quick list of some of the top items that "common sense" doesn't dictate:

 

- Bank or other asset statements.  When requested, a lender needs 2 full months, all pages, non-redacted (no, you cannot black out your account numbers and the purchase transactions you'd prefer to keep private).  If a transaction takes place after the most recent statement you provide, there can't be any gaps (example:  your statement ended February 15th, and you wrote a check we need to show cleared February 22nd.  You can't just show a transaction history for February 22nd, the transaction history must cover from the 15th through the 22nd to ensure there are no gaps)

- Cell phone documents/screenshots.  We can actually use these, BUT, if you're showing a bill paid, bank/asset information, it's important to note what we use MUST include identifying info - a page url, your name indicating the screenshot is from YOUR account, and an account # showing the account is one we have documented.  Screenshots without this info, bank generated excel spreadsheets, etc, are not acceptable.

Bank and asset statements for ALL accounts used for the transaction.  Moved money from one account we don't have documented into another account we do have documented?  We'll need the same 2 month history for the originating bank source/401k/etc

Keep your receipts.  No, not that mile long CVS receipt.  All large financial transactions should be documented.  Made a payment to the county for your taxes due soon?  Keep the confirmation page handy so we have proof before the state/county updates their online records.  Have a large deposit (generally considered 50% or more of your monthly income) hitting an asset account that we're documenting?  Make sure to maintain a papertrail for that deposit.

 

You can be proactive in maintaining good financial records and keeping your finances organized, but above all else, work with an experienced LO with a great team backing them up, and when they tell you what needs to be done to get your loan closed - do what you're told.

 

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Re-Blogged 2 times:

Re-Blogged By Re-Blogged At
  1. Lea Lagueux 02/18/2021 07:16 PM
  2. Joe Jackson 02/19/2021 04:21 AM
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Ambassador
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Chris Ann Cleland
Long and Foster REALTORS®, Gainesville, VA - Bristow, VA
Associate Broker, Bristow, VA

I remember a buyer giving the lender an ultimatum that he was sending "this not that" and "it better be enough."  That's not how it works.  The lender and I were both on the phone with the buyer who had gotten way too big for his britches and didn't understand the process.  No ultimatum is going to get you approved.  The documentation the lender asked for was needed.

Feb 18, 2021 05:59 PM #6
Rainmaker
160,590
Kris Collis, Associate Broker
Smart Way America Realty - East Stroudsburg, PA
Professional Results you Expect 570-801-5525

Borrower,

Put your investor hat on, think like the investor. 

Defer to the professional who knows what you do not.

Always ask before attempting any independent action for your loan's best chance to clear.  This ia not the time to get creative.

Feb 18, 2021 06:39 PM #7
Rainmaker
19,688
Lea Lagueux
Future Home Realty - Saint Petersburg, FL
Your Tampa - St Petersburg Local REALTOR

GREAT Post John. Love the straight shooting!  Now if i can just get home buyers to follow your fabulous advice :).

Feb 18, 2021 07:15 PM #8
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Jeff Dowler, CRS
eXp Realty of California, Inc. - Carlsbad, CA
The Southern California Relocation Dude

Hi John:

I'm glad to see this very wise advice and guidance featured. Now to get it in front of the buyers who need to understand what they must do, like it or not. I suppose many do not like being told specifically what to do or what to provide  but the loan application process is not the time to do it your own way, there's too much at stake.

And about buying that new car before closing...

Jeff

Feb 18, 2021 10:00 PM #9
Rainmaker
2,228,779
Joe Jackson
Keller Williams Capital Partners Realty - Columbus, OH
Clintonville and Central Ohio Real Estate Expert

Great advice. Thanks for sharing this!

Feb 19, 2021 04:19 AM #10
Rainmaker
3,771,463
Nina Hollander
Coldwell Banker Realty - Charlotte, NC
Your Charlotte/Ballantyne/Waxhaw/Fort Mill Realtor

Great post and great advice, John. When I start working with a client in the process of getting pre-approved and then approved, I immediately provide them two documents. One is called the "10 Commandments of Getting A Loan." The other is called "Don't Get Into A Pickle When Getting A Loan."

Feb 19, 2021 04:28 AM #11
Rainmaker
5,555,926
Barbara Todaro
RE/MAX Executive Realty - Retired - Franklin, MA
Previously Affiliated with The Todaro Team

Good morning, John Meussner the bottom line is to follow the guidance given by the lender.... when you don't, be prepared for the mucky water ahead...

Feb 19, 2021 05:08 AM #12
Rainmaker
1,725,177
Kat Palmiotti
406-270-3667, kat@thehousekat.com, Broker, Blackstone Realty Group - brokered by eXp Realty - Kalispell, MT
The House Kat

Great advice. There are buyers who object to the requirements but really the bottom line is, you want the loan? Provide what is required. End of story.

Feb 19, 2021 05:14 AM #13
Rainmaker
3,862,696
Michael Jacobs
Pasadena, CA
Los Angeles Pasadena 818.516.4393

Hello John - ah, yes those miles-long CVS receipts.  They are almost as collectible as the Bed Bath & Beyond coupons that seem endless.   Good information about mortgage rule-following.   

Feb 19, 2021 06:50 AM #14
Rainer
558,441
Dorte Engel
RE/MAX Leading Edge - Bowie, MD
ABC - Annapolis, Bowie, Crofton & rest of Maryland

Dear John,

You are so right. Even if something on your credit report is plain wrong, it can be better to suck it up and pay it to get the good rate forever than to fight it and end up paying a little more every month for the next 30 years.

Feb 19, 2021 08:37 AM #15
Rainmaker
363,812
Wayne L. Brown
Franklin Advantage Inc. - Alpine, CA

Right on John!!!

As a 40 year veteran of Mortgage Banking, you hit the nail on the head.

I couldn't have written this any better.

Outstanding.

If people would only listen!

Feb 19, 2021 10:54 AM #16
Rainer
316,571
Melissa Jackson
Century 21 Alliance Properties - Azle, TX
Helping You Make The Right Move

Definitely best advise for buyers is to listen and follow the guidelines given by the lender.  I had a client use credit cards for Christmas shopping right before her closing.  Needless to say, we did not close on that house.

Feb 19, 2021 11:58 AM #17
Rainmaker
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Grant Schneider
Performance Development Strategies - Armonk, NY
Your Coach Helping You Create Successful Outcomes

Hi John Meussner - some people simply do not listen and it pays to repeat many times.

Feb 19, 2021 12:17 PM #18
Rainmaker
517,354
Tom Bailey
Margaret Rudd & Associates Inc. - Oak Island, NC

Well said John! I love it when clients decide they know more about our business than we do! I often wonder if they think we are telling them something just for the Hell of it

Feb 19, 2021 04:11 PM #19
Rainmaker
4,091,450
Dorie Dillard Austin TX
Coldwell Banker Realty ~ 512.750.6899 - Austin, TX
NW Austin ~ Canyon Creek and Spicewood/Balcones

Good evening John Meussner ,

Excellent advice to follow. There are always those that feel they are sure they know better than a person in the business. Some find it hard to listen and Grant Schneider is right..repetition of the facts can go a long way!

Feb 19, 2021 04:14 PM #20
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Lynn B. Friedman CRS Atlanta GA 404-939-2727
Atlanta Homes ODAT Realty - Buckhead - Midtown - Westside ... Love our City - Love our Clients! - Atlanta, GA
Concierge Service for Our Atlanta Sellers & Buyers

John - full of clear information and I have two favorite parts - TITLE and "the pain points we feel on the back end of just about every loan process are rarely felt by our customers"  to remember.

JUST DO IT when documents are requested!
RISK? The transaction will be delayed.

***   One Client only sent one page of divorce document when asked to send all pages. Only sent printed pages of  bank statements."Doesn't seem necessary to send other pages."

***   One Client didn't want to give work supervisor's phone number because the person asked not to share number. Still have to check employment! 

***   When asked not to make unidentified cash transactions on checking account right before Closing, bought 12 sets of Baseball tickets for a party that friends repaid one by one with checks.  Affidavits needed  for each.

***  Here's a frequently encountered problem - fortunately all were solved in my sales history although one incident went into the HOUR before closing! DO NOT CHANGE DEBTS - yes, that means don't buy your new furniture or that special new car until after Closing!

As professionals, we like things to run smoothly, hence, spare the Clients the consequences of the "pain points" listed above. Hopefully, those same people appreciate what is being done to correct their not following directions.

Bet that every real estate professional reading this has encountered all or some of those situations listed above! Keep up the good work John!!!!

Feb 19, 2021 04:21 PM #21
Rainmaker
1,949,559
Lise Howe
Keller Williams Capital Properties - Washington, DC
Assoc. Broker in DC, MD, VA and attorney in DC

I lvoe this post - follow the rules! Don't try to think for the lender.  They are going off a checklist and what you think should be good enough will not be.

Feb 20, 2021 07:33 AM #22
Rainmaker
1,677,224
Lyn Sims
RE/MAX Suburban - Schaumburg, IL
Schaumburg Real Estate

It's so true about people trying to fight the system that's been set up. Yes it's unfair, abusive & your privacy is being intruded but you know what - you have to do it or buy the house cash. Oh, can't do that - just give them the paperwork until you can buy it cash.

Feb 22, 2021 08:20 AM #23
Rainmaker
20,606
Howard Richardson
Howard Richardson - Los Angeles, CA
IRS and State Tax Representation

Excellent post. I see a lot of overlap among tax practitioners and clients. Thanks for sharing.

Feb 22, 2021 11:32 AM #24
Rainmaker
848,145
John Juarez
The Medford Real Estate Team - Fremont, CA
ePRO, SRES, GRI, PMN

Who says lending is not sales? You, John Meussner, have to sell the borrower on the concept that what you are asking for is necessary and normal for the timely completion of the transaction at hand. We know not everyone will but in. Their reluctance can cause delay in closing or worse. 

Mar 02, 2021 07:59 AM #25
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John Meussner

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