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3. Confirm claims
Loan originators should calculate borrowers’ income. Don’t expect an underwriter to do it for you.
What to ask for ___________________________
Loan originators should ask mortgage prospects to gather the following documentation prior to applying:
• Most recent two months’ pay stubs for all employment declared on their federal tax returns
• Signed copies of the most recent two years’ federal tax returns, including all schedules
• Most recent two years’ W-2 and 1099 forms from all employers
• Most recent three months’ asset statements for all assets
• Addresses, telephone numbers, income earned and dates of employment for all employers during the previous two years
• Complete two-year residential history
• Government-issued photo identification
If applicable, applicants also should provide the following:
• Complete address, mortgage balances, payment breakdowns, insurance premiums and real estate taxes on all real estate owned
• Copies of Social Security or pension award letters
• Permanent resident alien card
• Most recent two years’ business tax returns
• Copies of child-support orders, divorce decrees, bankruptcy-discharge papers, death certificates, marriage certificates and lawsuit particulars
Note: To comply with the Equal Credit Opportunity Act, make it clear you are not asking about alimony, child support, separate maintenance and marital status at this time. Stress that prospects should prepare materials related to such things, if applicable, in case they’re needed later on.
Also, just because borrowers disclose annual earnings of $120,000 doesn’t mean that’s the amount you ultimately reflect on the application. What if they’re including a future bonus by mistake or counting on a raise they haven’t yet received?
Review all documentation at the time of the application. Break down the income claim to promote accurate underwriting from the start.
4. Explain oddities
Underwriters want to approve loans, but they want to keep their jobs even more. Give them an opportunity to do both by explaining oddities.
For example, if your applicants want to buy a smaller primary residence within a few miles of a current primary home they intend to keep, explain the situation in a way that makes sense to an underwriter.
In this example, without seeing a valid explanation and supporting documentation, the underwriter will be inclined to consider the new property an investment.
Present your clients’ situation clearly and honestly. For example, if they’re downsizing because their kids have left for college but they envision their grandchildren growing up in their current house, consider including a notarized affidavit from the applicants explaining why they want to buy a smaller primary residence so close to their current house.
Support the explanation with other documentation. For example, college-acceptance letters and birth certificates could help in the above situation. A copy of the deed or other proof of the clients’ tenure in their current house also could help.
5. Tell a story
You might know intimate details about your clients’ lives, but underwriters working on their files don’t.
With each file you submit, include a letter to the underwriter. Place it on top. This letter should explain the file’s details, unique situations, pros, cons and red flags.
Make it simple, but tell the story. Anyone who opens the file should be able to understand the loan within minutes.
* * *
By approaching all your applications in an organized, thorough and detail-oriented manner, you will find yourself originating more loans, receiving more referrals and spending less time dealing with trouble spots. As your reputation for excellence spreads, don’t be surprised when underwriters start fighting for your files.
Rich Leffler, mortgage-education consultant and instructor, is an award-winning industry expert and speaker. He excels in customer service, research, mortgage origination, training and consulting. He operates Professional Mortgage Consulting, through which he creates and instructs mortgage courses while helping mortgage businesses train their employees
and grow. He lectures regularly on compliance issues, mortgage sales and customer-service strategies that win, and is available for in-house training, speaking engagements and seminars. Contact firstname.lastname@example.org or (410) 486-2430.
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