It’s called loan processing for a reason....financing real estate with a mortgage loan is a process, not a one step event.
We have all heard a consumer or real estate agent bemoaning the fact that their loan officer is asking for another piece of documentation, another letter of explanation, the updated statement of their checking account or their latest pay stubs. Or, the underwriter wants further clarification on their employment or credit history and another comparable on the appraisal.
Getting a mortgage in today’s market involves everyone in the process dotting each and every “i” and crossing each and every “t” (yes, some are calling it “CYA...cover your you know what...lending). It can be a challenging and, in some instance, test the patience of Job. I get that......
I have always operated my business with the approach to be as absolutely thorough at the onset of originating a mortgage as possible. What that means is that I do not ask for the bare minimum of documentation to get a preapproval, but for the whole enchilada.
In other words, I evaluate the consumers needs and discover as much as possilbe about their specific situation....then I put on my underwriters hat and attempt to determine EVERY piece of documentation the underwriter may request. The rationale is (and I have found to be true) that consumers are happy to comply on the front side of beginning the loan process, but completely resent being “nickle and dimed” for piecemeal documentation.
Getting a mortgage is intrusive and invasive...only a true masochist would enjoy the process! But, playing a game of documentation “strip poker” by forcing a consumer to strip away his/her privacy one piece of paper at a time is just plain rude.....and, extremely frustrating. Much better to strip immediately and get the embarrassment behind you then to sit there in your skivies waiting for the next roll of the dice!!!
Having clarified that I believe it is imperative for a mortgage professional to be absolutly thorough from the very onset of a introduction to a potential client, it is equally imperative that consumers and real estate agents understand to getting (funding) a mortgage loan is a PROCESS that is much like legal discovery in the legal system.
There are simply things no one in the transaction know at the beginning of the loan process. This becomes glaringly clear as the process continues. Usually, the request of additional documentation can be justified and explained to the consumer (and, if necessary, the buying and selling agents involved) to ensure the transaction moves along smoothly.
However, there are at least two instances that create havoc for all parties involved in the loan process.....and, both of them stem from the desk of the loan officer:
1). And, in my opinion, the worst of the worst...Number one, is the loan officer that skims the surface of the interview process, asks very little of the consumer, but does a masterful job of “selling” his/her service. The consumer has bought the “sizzle” of the steak, but will be dining on shoe leather in this transaction.
2). Inexperience or lack of knowledge of the COMPLETE lending process. I am not being simplistic to state that a fifth grader could fill out a 1003 (loan application). For goodness sake, the “blocks” tell you what to put in every space. Name here, social there, date of birth...it is very much like a “paint by number” kit. Fill it out according to the directions and all should be good, right?
NOT!!!! Between the “blocks” of the 1003 are all the cracks in the mortgage process (like banking compliance, investor guidelines, real estate law, escrow or attorney requirements...the list goes on and on).
OH, and you want to know the NUMBER ONE complaint about loan officers from underwriter????? “WHY CAN’T THEY FILL OUT A COMPLETE APPLICATION?” (It’s true, folks, at the wholesale level it is very realistic to state that 1 in 10 (if that) applications are completed with enough information for the underwriter to make an informed decision on the file.
The “discovery” period of the finance process can be less painful and intrusive IF the loan officer is thorough at the point of origination AND can adequately and completely explain the “WHY” of the request from the underwriter/closer/funder...or anyone associated with the loan.
As a loan officer, knowing the “WHY” is just as important as knowing the “WHAT” in the documentation of a loan file. Knowing “WHY” enables me to HELP the underwriter come up with the “HOW” to make the exception or to make a substitution of specific documentation.
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Deborah "Dee Dee" Garvin
NMLS #279125
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Deborah - That's why we need folks with integrity at the beginning of the "process." You're in that group, but how many were not during the inflation of the housing bubble? Suggested!
Deborah, very clear and well put, it is east to see shy you have survived and will continue to thrive. This should be read by every one.
"I do not ask for the bare minimum of documentation to get a preapproval, but for the whole enchilada." You're singing to the choir. :)
In my initial discussion with a prospect, they get the "whole enchilada" list of documentation I will need before I do anything. If I get resistence from the get-go, then they get my all or nothing speel. I either get everything or I do nothing.
I've recently read quite a few posts from AR Realtors complaining about SOP of the loan process and, of course, blaming the MLO's and lenders for being incompentent because of the types of documentation that is being required. Earlier this week, I got a call from a Realtor that wanted me to pre-approve her client based on a three minute conversation with her and not a single piece of documentation. SERIOUSLY!!!
After listening to her complain about the type of documentation I needed in order to provide her clients with a prepproval and as much as I wanted to tell that Realtor to go waste someone else's time and energy, I instead chose to give her a brutally honest lesson on how the pre-approval process is conducted these days (because it was quite obvious she has not had a client or sold a property in awhile). Needless to say, I haven't heard from her or her client.
Anyway, sorry for the long comment, I'm just getting so tired of the complaining Realtors and agents about the loan process and required documentation. I agree that "nickel and diming" a borrower to death with documentation requests is silly but it doesn't matter if you ask for it all up front either, people are constantly complaining about the process and requirements.
The days of getting a loan with no documentation and no verifications are gone people - GET OVER IT! Frankly, I'm glad those days are over and we are actually getting back to more sensible underwriting, stringent yes, but overall more sensible. Granted, the stricter lender overlays are a little irritating but I don't make the rules, I just follow them and the more cooperation I can get from the parties involved, the easier and faster that we all can get to the closing table.
Good afternoon Deborah
This is a post that needs to be read by everyone..love the to the point..no bull@%**! Many should have not gotten loans before..they were breathing and that was about it! There is no doubt in mind what you are a survivor!! Suggest button for sure!
John, Thank you so much! IMHO, the sooner the SALES peeps are out of this industry the better. I am not a sales person, I am an educator of financial opportunity. The slicked back hair and $500 suit will not get the loan closed!!! Thank you for your support!
Brenda, Hey, in this market survival is still a day to day thing for all of us...but I appreciate your support and comments!
Donne, Woman, I KNOW you know what I am talking about....I am the bad guy with some peeps because I won't just say "YES" on the first date!! (hey, there might be a post there). Show me the money, honey, and I will show you the time!!! Love your comments!!
Dorie, Thanks you for your support and suggest! Appreciate it much!!
I get all of my documentation upfront too. I won't issue a Pre-Qualification certificate without it. Once they go under contract, I then get the remainder of what is going to be required for an actual approval such as signed disclosures, copy of DL. letters of explanation for inquires and derogatory credit, documentation for large deposits, VOR info, etc. Pre-underwriting the file is a must in today's market.
Donne....I am with you. I am so sick and tired of some of these agents complaining all of the time about what is needed for a mortgage approval. If they don't want to give me the info for the Pre-Qual, then go waste someone else's time. Either they need to learn to deal with it or get out of the business. Things are not changing anytime soon.
Rodney, Thank you for weighing in. The fact of the matter is both you and Donne are correct....agents who do not understand that this is a collaborative effort are just making life miserable for all concerned. Much like parenting, there is no benefit to the "children" to throw the other parent under the bus. We want to close the loan as much as any real estate agent.....doing so is difficult with tire tracks across my tummy.
This is a must read for everyone, mortgage professionals included! A good loan officer (such as yourself!) will conduct the interview with the client well enough to complete the application thoroughly, know the right questions to ask, gather the proper documentation UP FRONT and explain the process so when, and I do mean when, additional documentation is requested it will not be a surprise. They will also be able to advise the client the things "not" to do during the process. (like buying an entire houseful of furniture prior to closing on credit!)
The underwriters job is to make a decision based on credit worthiness and collateral. In order to determine the credit worthiness of a client, there must be adequate information provided to make this decision. Just as when an appraiser goes to evaluate the collateral they will need accurate, current information of comparable sales, square footage, room count, etc. We don't expect the appraiser to make assumptions based on half assed information we can not expect the underwriter to either.
Stephanie, Thank you for your comments! You are so right about asking an underwriter to provide an answer with half baked files....used to drive me crazy. In the height of the boom, when every Tom, Dick (I won't do there!!) and Harry was getting into the mortgage industry my underwriters and I (Sales Manager in wholesale) spent more time processing files than closing them!!! Suffice it to say the entire industry was mired in the muck with idiots. The one shining part of the meltdown is most of the incompetence is gone!
Deborah - Perfect post and suggested for a feature. I am just now in the process of writing an article on the need for underwriting. Please feel free to pick it apart as it may be a bit of a rant.
Its important to get almost everything upfront and to let them know there will be more to turn in later. It makes things go smoother. Thats what I like from my loan officers.
I understand and try to explain to my clients that the "documentation" needed can change. Just because it changes for a loan source may not do a particular house and the officer may have to change the loan funding source and the new end lender may require more or different documents. Getting a loan is a process and it's not cut and dry.
Bryan, Thank you so much!! Hey, invite a mortgage person to pick apart an article on underwriting?????? Are you serious????? hehhehehe....Red pencil newly sharpened and waiting to start the mark up! LOL!!
Chuck, Exactly!!!
Tammy, It always helps when the agent understands the process and is on the same team with the mortgage person. There is nothing worse that trying very hard to close a loan for a consumer and get the agent their commission....all the while the agent is throwing you under a bus with the client!!! The worst!!! Neither of us make any money until the loan closes...I promise I am not intentionally sabotaging the file! LOL!
DD
Re-blogging this and.... you are that woman.....Finding the right people is the key. They are out there and the they work the system and the system does work....Professionalism works.......
Deborah - I like your approach to a pre-approval letter. So many buyers don't understand how important DAYS are once a contract is ratified. And I HATE missing contingency dates.
Richie, Thank you so much for the reblog! Appreciate you!
Cynthia, Thank you! I firmly believe any MLO who is willing to provide a preapproval without COMPLETE documentation is really (in the long run) showing both the consumer and the agents involved a complete lack of respect. Missing dates????????? Oh no, oh no!!! Can it happen? Yes, but it certainly should be RARE!
Love your blog.
Most agents are clueless about the loan process from beginning to end. Hate to be blunt, but for every good agent out there that truly cares about their client, there are 10 that purely only are concerned with their commission,
Had the displeasure of dealing with one this week.
Lost a loan this week afer the seller had transferred title to 3-4 different LLC after he bought the propertsy at a foreclosure sale. Explained to both agents the fraud that is prevalent in multiple LLC transfers especially in AZ, and they were just clueless. They are commission driven, never gave a hoot about the buyer who came to me for more advice.
Naturally since I was the lender, it was my fault. I wish every realtor was required to read your blog.
Well done !
Mike, Thank you! And, you have actually uncovered my "secret" to why I blog on ActiveRain. I have no tolerance for "stupid" (agent or otherwise...LOL!). You and I WANT to help the consumer and WANT the agent to get a commission (or, we don't either for goodness sake!!!). To think or imply that I would not stand on my head and stack bb's to get a loan closed is absurd. Fraud it? NO!, Do anything non-compliant? NO! But, for goodness sake, I want the close as much as the consumer or the agent....IF there is a way I will get it done. My "secret"?....I truly believe the agents who are on active on ActiveRain are the more ethical, intelligent, respectful in the industry...I am not pandering to the masses!!! I don't have the patience to work with anyone who is willing to throw me under the bus at the slightest issue (had that is corporate life, don't miss it at all!!!). ActiveRain Agents are (at least MY friends) the best, most respectful and most industry savvy in the market...I WANT their business. I crave their business! And, I will stand on my head for their business, if necessary....Why? Because they are worth it.
I agree that you're preaching to the choir :-) Sad thing is that buyers are out there STILL looking at houses before they get a pre-approval or meet with a lender. So they find a house they like, then try to get financing, then get mad at the process. How, how, how do we get them to get financing FIRST??? That's the $25,000 question.
Deborah,
Thank you for putting this material together so well.
We try to get everything the first time, however, we have had changes to the required documentation from one loan, to another of the same kind, within a month.
As others have said so well -- now if we can just get them to our offices before they get their "dream home" in their sights.
Documentation strip poker. . . Hilarious! You couldn't be more correct about point number 2. Loan application interview technique is probably the most underemphasized skillset for loan officers. I'll feature in "Underwriting" and I'll feature your 203K articles too. Great writing Deborah!
Tamara, I cannot imagine a real estate agent showing more than one house to a consumer without requiring them to get preapproved! One, because they called about a specific house and it is a opportunity....but, after that I would require a preapproval and a buyers agency agreement! But, that's me!
Steven, There are always exceptions, of course. Only a inexperienced or "bored" agent would ferry unqualified peeps around looking at houses!!!!
Charles, Hey, I almost thought I was going too far...but, I like the metaphor!!! Maybe it will become an industry "standard" heheheh! Thank you very much for featuring my articles. I really appreciate it!!
Deborah: Thanks for the post. Yes, processing is getting interesting these days, isn't it? My processor is swamped. Needless to say turn times are increasing for now. The better we communicate throughout the process, the less confusion there will be. Of course we all hope we hearken back to the day of less documentation but, for now, that is not a reality! Take care.
Paul, Thanks for the comment. IMHO, the sooner we all quit hankering for the days of ole' when stated income ruled, the sooner we will all succeed higher and better. Talking about "gee, remember when is a complete waste of time. Not meant rudely...you have probably been one of the most proactive and positive MLO's I have seen in recent times!
Paul, Thanks for the comment. IMHO, the sooner we all quit hankering for the days of ole' when stated income ruled, the sooner we will all succeed higher and better. Talking about "gee, remember when is a complete waste of time. Not meant rudely...you have probably been one of the most proactive and positive MLO's I have seen in recent times!