Day One Certainty (And Why You Should Care)

By
Mortgage and Lending with Mason-McDuffie Mortgage, Conventional Loans, Jumbo Loans, FHA, 203(k), USDA, VA, NMLS #138061 MMCD #1141

Day One Certainty (And Why You Should Care)

 

A lot of people for a lot of years have made a lot of money in the mortgage and real estate industries without relying too much on technology.  "All I need are my relationships!" is a common refrain.  "This is a people business!" is another.  And while both are true, those not using modern technology in their 'people businesses' are about to get left behind.

 

Back in 2018 I first wrote about Day One Certainty (D1C) and how it can improve the loan process for customers.  To summarize, D1C mitigates risk for a lender - if a loan file is offered D1C by Fannie Mae or Freddie Mac, a lender is not liable down teh line for anything the lender validated with D1C technology - this means an easier burden on underwriters, and a more streamlined process.  At the time, the tech was still new to the industry, but it was clear then where we were heading.  Today, it's arrived.

 

Fannie Mae & Freddie Mac accepting single source data has effectively changed the game and given lenders that embrace the technology an edge.  How so?  In today's world, here are a list of documents we no longer need on many conventional loans: bank statements, paystubs, W2s, Verifications of Employment, Transaction histories showing deposits/inspections clearing/final funds to close, and in many cases we don't even need an appraisal.

 

What does this mean for real estate agents and their clients?  Preapprovals at lightspeed, loan turn times days (sometimes weeks) faster, and an easier overall process for consumers.  What does that gain in speed mean?  More competitive offers with flexibility on closing dates & shorter loan lock periods which result in better rates for customers.  Lenders using the technology can scale volume without sacrificing service, serving more people and serving them better.

 

Many lenders, for some reason or another, are not adopting this technology, and many more are not embracing it.  That's good news for people like myself, my team at MasonMac, and similar entities - it means that while our competition is "waiting on bank statements and paystubs", our customers are already in the house prepping their offer.  When the other lender needs 30 days, we're good to go in 2 weeks.  Guess who's getting the house when it's our client VS their client, all other things like price and contingencies being equal?  

 

For agents, it means less chance of a transaction failing - the information needed for an underwriting approval is validated and accepted by Fannie Mae/Freddie Mac before an underwriter even sees the loan file through their automated underwriting system.  It means less time with an underwriter, and in some cases, less time waiting on an appraisal if an appraisal waiver is received.

 

In the coming years when the market is expected to remain tight due to inventory, it's going to be those who have embraced this technology that will thrive, providing a higher level of customer service to an ever-growing demographic of millenials and gen-Zers who demand it.  Lenders requesting borrowers accommodate their old school way of doing things will be left for truly greener pastures by both customers and high level loan officers.

 

Using Day 1 Certainty (and for agents, working with a lender that uses it) is a no brainer in providing the best customer experience, offering great pricing, and making a once tedious process a streamlined one with limited work from a borrower beyond an initial application.

 

In just 3 years, D1C has gone from market-entry to the best way of doing business, with full asset validation available for nearly every financial institution in the US, and now income validation having a reach of nearly 80% of salaried/W2 employees in the US.  And while this is all great news and reaches an immense audience, it's only the beginning - FHA/VA are always slower to adopt new technologies, but they'll be on the way in the years to come for those products as well.  If you're not using D1C as a lender, you need to start.  And if you're not working with a lender using D1C as an agent, well, you too, need to start.

Comments (17)

Anna Banana Kruchten CRS, CRB, Phoenix Broker
HomeSmart Real Estate BR030809000 - Phoenix, AZ
602-380-4886

John this makes total sense to me.  Our market runs fast and hot and there is no such thing for not getting 'it' done immediately. A quick close can make a world of differece when in a bidding war.

Jun 15, 2021 02:34 PM
John Meussner

Yes it can!  The right tech can make a huge difference in the process and keep things smooth sailing for everyone!

Jun 16, 2021 10:13 AM
Liz and Bill Spear
RE/MAX Alliance 513.520.5305 www.LizTour.com - Mason, OH
RE/MAX Alliance Cincinnati & Dayton suburbs

John, I can think of at least one bank that could use some lessons on streamlining and how their lack of it impacts clients.  Today was supposed to be a closing for one of my buyer clients, and as of today the bank still can't provide us a set in stone date for closing.  Fortunately the sellers are willing to wait.

Same bank, different client, loan officer says they CAN do a loan in 32 days with expediting, but prefer 45.  Tight inventory, that's not good for my buyer.  
Time to have a conversation about switching horses in this race.

Jun 15, 2021 08:17 PM
John Meussner

OUCH! That "CAN" should look more like 2 weeks right now!  We of course prefer 30 days to give everyone some breathing room, and my favorite close dates include the verbiage "on or before...", but loans (depending on appraisal times) are relaly only taking 2 weeks to get done.

Jun 16, 2021 10:14 AM
Nick Vandekar, 610-203-4543
Long & Foster Real Estate Inc 610-225-7400 - Devon, PA
Tredyffrin Easttown Realtor, Philly Main Line

Interesting, we have seen many changes over the pandemic and hopefully, banks will soon be accepting digital signatures for all closing docs as it allows the consumer both seller and buyer to sign ahead of time and on their schedule and not have to turn up at a specified time and place. This I agree will be a game changer for consumers as they get used to it.

Jun 16, 2021 12:56 PM
John Meussner

Nick Vandekar, 610-203-4543 we're close - we allow sellers to sign by whatever means is acceptable to title - on the buyer side 90% of our closing documents are esigned, they meet with a notary just for documetns that still require physical signature (note, deed) - but the signing portion of settlements with us only takes about 10 minutes : )  We're working on a remote notarization implementation, so hopefully we can be 100% paperless for closing before too long!

Jun 16, 2021 02:18 PM
Laura Cerrano
Feng Shui Manhattan Long Island - Locust Valley, NY
Certified Feng Shui Expert, Speaker & Researcher

We all need that bit of resiliency these days and especially after Covid. We will survive for sure1

Jun 16, 2021 08:52 PM
Kat Palmiotti
406-270-3667, kat@thehousekat.com, Broker, eXp Realty - Kalispell, MT
Helping your Montana dreams take root

Anything that speeds up the mortgage process is good news. I'm sure your clients are thrilled you have adopted these better tools for financing.

Jun 17, 2021 04:56 AM
John Meussner

Kat Palmiotti we just had a refinance customer (past client) and literally the only document other than esigned disclosures we needed from them was for them to text message us a picture of their drivers license - that was it!  

Jun 17, 2021 01:31 PM
Ed Silva
Mapleridge Realty, CT 203-206-0754 - Waterbury, CT
Central CT Real Estate Broker Serving all equally

If the DOC becomes widely accepted and used it will give an edge to people that are ready to buy and can move quickly

Jun 17, 2021 06:06 AM
John Meussner

exactly, we're using it to speed up turn times, and the appraisal waiver option is also phenomenal, we're seeing them on more purchases

Jun 17, 2021 01:32 PM
Ginger Harper
Coldwell Banker Sea Coast Advantage~ Ginger Harper Real Estate Team - Southport, NC
Your Southport~Oak Island Agent~Brunswick County!

Excellent information and pertinent to today's market.

 

Jun 17, 2021 06:50 AM
John Meussner

Thanks Ginger!

Jun 17, 2021 01:32 PM
Peter Mohylsky. Broker
Miramar Beach, Florida - Santa Rosa Beach, FL
BRIX REALTY

Thanks for sharing this information.  Times are certaintly changing.  

Jun 17, 2021 07:40 AM
John Meussner

they sure are!  In this case, for the better, life is so much easier for borrowers when we use the technology available efficiently.

Jun 17, 2021 01:32 PM
Lise Howe
Keller Williams Capital Properties - Washington, DC
Assoc. Broker in DC, MD, VA and attorney in DC

I have been drowning in work (like everyone else has here in the rain) and I haven't been active on activerain for the past few months - but when I read your blog posts, I am reminded of why it is important to come to the rain and stay in touch! 

Jun 17, 2021 09:56 AM
John Meussner

I appreciate that Lise Howe , and glad you're busy!  Hope everything else is well : ) 

Jun 17, 2021 01:33 PM
Jeff Dowler, CRS
eXp Realty of California, Inc. - Carlsbad, CA
The Southern California Relocation Dude

Great news, John. What a terrific competitive advantage as a lender, but also for buyers, especially in this very competitive market.

Anything that streamlines and speeds up the mortgage process is a good thing from my way of thinking.

Jeff

Jun 17, 2021 08:41 PM
John Meussner

It really is - it baffles me that more lenders and LOs aren't embracing this as it takes the process to the next level

Jun 18, 2021 11:13 AM
Laura Cerrano
Feng Shui Manhattan Long Island - Locust Valley, NY
Certified Feng Shui Expert, Speaker & Researcher

For me it takes a lot of inner work to really know myself through the years when it comes to matters like this

Jun 17, 2021 11:46 PM
Ginger Harper
Coldwell Banker Sea Coast Advantage~ Ginger Harper Real Estate Team - Southport, NC
Your Southport~Oak Island Agent~Brunswick County!

You have done a lot of work on this and we are the ones that are benefiting from your work  Thanks so much

Jun 18, 2021 07:02 AM
John Meussner

Thanks Ginger Harper we are working hard to make thing sbetter for our customers and partners alike!

Jun 18, 2021 11:12 AM
Paula McDonald, Ph.D.
Beam & Branch Realty - Granbury, TX
Granbury, TX 936-203-0279

These are interesting times. In the 17 years, I have been in real estate, this market takes the cake.

Jun 18, 2021 01:34 PM
John Meussner

15 years in myself and I've never seen this one, either.  Then again, I didn't see last year's or the year's before either ; )  It's always a unique challenge and it keeps things interesting!

Jun 18, 2021 04:40 PM
Debb Janes EcoBroker and Bernie Stea JD
ViewHomes of Clark County - Nature As Neighbors - Camas, WA
REALTORS® in Clark County, WA

This would be a game-changer. And, like others have said, what an interesting time to be in real estate. 

Jun 19, 2021 06:25 AM
John Meussner

Debb Janes EcoBroker and Bernie Stea JD we just got a team member licensed in WA if you want to give us a shot : )  Day 1 certainty really does make everything easier when buyers qualify under it!

Jun 21, 2021 01:00 PM
Sheri Sperry - MCNE®
Coldwell Banker Realty - Sedona, AZ
(928) 274-7355 ~ YOUR Solutions REALTOR®

Hi John Meussner

Lots of great information on D1C.  Buyers do need to know there is a difference in lending institutions and just because they have a "banking" relationship does not mean that that bank is their best choice.  

However, the Sedona market is so hot right now that "Cash is King" made such a strong comeback that some buyer agents will not even accept buyers who are not cash.  Sellers with multiple offers are not even looking at government-backed loans or any loans for that matter. 

But when it turns back to a more balanced market, your info is invaluable to clients. 

Jun 19, 2021 08:12 AM
John Meussner

Great insight Sheri, I wish more people would pay attention to financed offers, especially if it can net the seller more in the same amount of time, which often it can!

Jun 21, 2021 01:01 PM
Marte Cliff
Marte Cliff Copywriting - Priest River, ID
Your real estate writer

Interesting, and I'd love to know more. If you don't need all that documentation, what do you need? And how does the bank get its assurance that the borrower is a good risk?

Jun 19, 2021 10:31 AM
Beth Atalay
Cam Realty and Property Management - Clermont, FL
Cam Realty of Clermont FL

John Meussner, I recently had a closing that took 62 days. This was a conventional loan, it was one of the worst transactions I've ever had. The lender admitted it was their fault which means nothing without any action. A good lender can be our best friend or the opposite but we do need them for every transaction that's financing. 

Jun 21, 2021 09:22 AM
John Meussner

UGH, that's way too long!  And yes, a lender can make or break a transaction, communication, and just as importantly, action, is needed.  No reason it should ever take that long

Jun 21, 2021 01:03 PM