As published in Scotsman Guide's Residential Edition, July 2012.
Like so many other aspects of the mortgage industry, underwriting has changed drastically in the past few years. Some lenders have even had to scale back their workforce, and their underwriting teams often are working harder than ever.
Meanwhile, mortgage brokers and originators must explain to borrowers why a mountain of papers and documentation is required for what, at times, can be a slim possibility of approval. Underwriters now face strict vetting processes implemented by initial desktop-originator and desktop-underwriter findings, and these processes often can result in frustrating rejections.
Nonetheless, brokers and originators can take certain measures to bolster their loans’ turnaround times and their approval rates. Consider the following seven tips for improving your applications and averting underwriting delays that can turn into disasters.
1. Always send a full package with your initial submission. A full package should consist of:
All of your initial disclosures, complete with wet signatures.
Every page of every pertinent bank statement, including the pages that are left intentionally blank.
The borrower’s complete job history dating back at least two years. Related, if the borrower is self- employed, request personal and corporate tax returns or extensions.
All insurance-declaration pages for all owned real estate properties, including commercial properties, for refinances that include mortgage coupons.
Copies of Social Security cards and driver’s licenses for all borrowers on the loan.
2. Run every scenario by your account executive before submitting the file, because that account executive is a direct line to the underwriter. This may sound tedious, but consulting with the account executive can help you keep track of overlays, which can change with frequency. If you’re primarily dealing with purchases, consulting with the account executive before submitting is essential, especially if your closing ratios with that particular lender are not 80 percent or higher.
3. Don’t spread your files among too many bank relationships. From the underwriter’s perspective, quality sometimes is preferred to quantity. If you have only three lender relationships but close every submission that you send them, you may drastically improve your chances for receiving special treatment at a critical moment, such as a fast approval on a short-sale purchase.
4. Don’t underestimate the value of communicating with your processor, because this could be the single most significant key to your success. Remember that your processor is the liaison between you and the underwriting team. If you receive a conditional approval that has more conditions than you would like, speaking with your processor is a much better path to take than sending an agitated e-mail directly to the underwriter.
5. Be prepared to order the appraisal as soon as the disclosure period is established. Ordering an appraisal can take significantly longer than before.
6. Keep reminders of all the deadlines throughout the process. Although this may sound simple, it’s vital to make sure that nothing slips through the cracks. Any hiccup can be costly to you, your borrower and your referral partners.
7. Follow up. The importance of this final point can’t be overstated. Following up on any transaction is — and always will be — of the utmost importance.
Michael Mekler is the founder and owner of Liberty First Capital. His office is in Carlsbad, Calif., a suburb of San Diego. His passion for writing about the lending industry drives him to contribute to two blogs: SanDiegoMortgageReports.com and Minyanville.com. His mantra is that the interests of the borrower come first, and his dedication to running an exemplary business is rivaled only by his dedication to his family. Reach Mekler at (760) 536-6200.