Client: Why do you wait until the last minute to ask us for this stuff? Loan Officer: Why do you wait until the last minute to give it to us?

April 2nd, 2012

I have heard so many people ask why we wait until the last minute to ask them for certain documents for a loan approval. I have a few answers. Mostly it is because many times the mortgage borrower has waited until the last minute to give it to us! Fannie Mae requires certain documents, that get underwritten, that many times yield more paperwork needed. And do you know what happens when you submit last-minute document requests? You get last-minute answers. And there is nothing more frustrating than dealing with an angry client who has helped to cause their own problem. The last thing you can do is point the finger at them, so you end up taking a verbal beating without reminding them that they did not submit the documents in a timely fashion.

But the larger issue is the nature of loan processing and underwriting a loan. By default, it means that you get answers at the last minute. Here is a very simplified version of what I mean:

Step 1: The loan starts with a loan officer who reviews the loan application to look for red flags, but the loan officer is not an underwriter.

Step 2: The appraisal is ordered and the mortgage borrower is given a checklist of expected application documents needed, by the loan officer, a loan processor, or an assistant. These people are not underwriters.

Step 3: The loan processor collects the documents and puts them into the right order and submits the file to the loan underwriter. The loan processor is not an underwriter.

Step 4: The underwriter underwrites the loan, and many times finds things needed that no one else saw. This is the underwriter’s job. The underwriter is indeed an underwriter.

So you can see the nature of a loan is to take a hunk of time to process the loan, get the appraisal, do all sorts of internal compliance, and then underwrite the loan. And then usually ask for more documents.

It is not possible to make Step 4 happen at Step 1. We could hire numerous underwriters, and replace all the loan officers, loan processors and assistants with high priced underwriters. This way we would have decision makers at every step of the process, telling mortgage borrowers well in advance what they needed. But then this hypothetical lender with 100% underwriters would have to raise the cost of the loan to cover the much more costly underwriters, to the point no one would ever come to this lender in the first place.

So since the process is a process, and it has to flow in a certain order; it would help immensely if mortgage borrowers provided all the required documents immediately up front. But this almost never happens.

Another problem I get on the back end of a loan is not only anger and frustration for a paperwork request someone usually feels strongly they should not have to submit to, but then the documents they provide yield even more questions and more paperwork requests. Then I get yelled at by people asking if the requests will ever end. Of course they won’t, because we enjoy torturing people, it is a great way to endear clients to us (hear the sarcasm?).

Of course the paperwork will end! But this is the nature of paperwork. When you submit a loan application the underwriter may see three more things they want to review in order to approve the loan. When you submit those three, let’s assume one of them was a bank statement that the underwriter wanted to see in order to show your deposit check cleared your bank account from when you submitted the deposit check with your initial offer. Then let’s assume the bank statement you submitted to demonstrate that the check did indeed clear also showed a large deposit of $40,000. Is the underwriter supposed to ignore that deposit, or do you suspect the underwriter will want to see an explanation and a proper paper trail to document where the $40,000 came from? You got it, more paperwork! It’s Pandora’s box all over again.

And more importantly, these paperwork requests are based on the rules of Fannie Mae, not the dictate of any underwriter. Truth be told, the underwriters would approve loans without half the paperwork in the file. They are quite capable of making a good underwriting decision without the minutia that Fannie Mae makes us all go through in our industry. So if you want to complain, I would suggest you call your government representative, and complain about the rule makers we must all follow since the government now owns Fannie Mae.

So the anger and frustration should hopefully subside when people better understand the nature of how the transaction works. It is, unfortunately, designed inherently to yield last minute requests, and possibly subsequent requests when you send in responses to the first round of requests. Let’s all lose the anger, relax, breathe, and dig in and get the paperwork done. It has to be done in the end anyway, one way or the other. You can start the process by getting prequalified long before you want to make an offer, and we can walk calmly through the requirements together.

what-happens-when-you-delay-documents-for-your-home-loan

 

Brian Martucci is a loan officer for Capital Bank Home Loans, a division of Capital Bank, N.A. He has been in the mortgage industry since 1986 and has served in a number of roles, including loan processor, loan officer, mortgage broker, branch manager, and vice president. Brian Martucci – NMLS# 185421. His opinions do not necessarily reflect the opinions and beliefs of Capital Bank Home Loans or Capital Bank. Capital Bank, N.A.- NMLS# 401599. Click here for the Capital Bank, N.A. “Privacy Policy”.​

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70 Responses to “Client: Why do you wait until the last minute to ask us for this stuff? Loan Officer: Why do you wait until the last minute to give it to us?”

  1. Donna Conlon says:

    I don’t understand what would be so difficult about the loan officer having a list of possible requests from the underwriters (i.e. a list either from the underwriters directly or things that they have seen requested in the past). That way buyers could be preparing those documents in case they are needed while they are in that limbo waiting for the last minute requests. This would speed up the process for everyone.

  2. brianm says:

    I know that sounds obvious. but unfortunately the possibilities for what an underwriter can ask for are literally almost endless. It is very difficult for me to extract the basics that I need from the average consumer, let alone every, single, possible document that the underwriter may ask for. There are real world limitations on what people will provide, and when they will provide it. For every organized consumer like yourself that wants to provide anything and everything in advance, there are 99 who don’t want to be bothered and only want to provide the bare minimum. And to find out the bare minimum means getting the basics in advance, and then seeing what the underwriter wants in the end stages of the loan when it is being underwritten, which is usually right before settlement. If every client were like you, this process would be a lot easier 🙂

  3. Smack says:

    There are some things that are common do’s/dont’s in this process that borrowers aren’t aware of though and that can make for some serious delays.

    For example, no one ever told us at the beginning of this that cash deposits would be a problem. My husband works in an industry where people are thanked for their service in cash. We deposited those cash tips and saved money. Come to find out this would cause us the headache of a life time and delay our closing. Possibly even result in the loss of the home. (still waiting to hear).

    If our loan officer had to told us upon pre approval “here are some things that cause issues so watch out” we would be in a much better spot.

    So maybe the process is different for some, but if we were educated up front then it would be helpful. Most consumers are not loan experts, but its funny how people just expect us to know what we should/shouldn’t do!

  4. brianm says:

    That is a great point Shannon! If you are not properly educated as to the process, you cannot be expected to know all the rules at the start. If someone is telling you things as you go along, that is not the proper way to process a mortgage application. I try and front load all that the client needs to know, and even though it can be overwhelming, most people appreciate the up front education when the process is all over. People just want to avoid surprises.

  5. Sam says:

    My file went back and forth with underwriter 3 times already and now waiting for the last document to be cleared, i have to close in few days now as per contract. whats frustrating me is not the paper works or underwriting process but the loan office and loan processor dont have a proper check list and even after having 30 years of experience my loan processor doesnt know what underwriter needs. I missed to sign in a column my LO or loan processor did not find it, came back from underwriter 2nd time one document i am suppose to put my address which i missed again underwriter came back now recently the scanned document send to underwriter is not readable, I mean these simple issues are holding my loan approval.

  6. brianm says:

    That does sound like a tough time, but its hard to say what the delay has been without knowing all of the details of the file. But in general, you are right, and lenders should do a better job of letting the clients know all the possible paperwork that they may have to provide. I provide my clients with the following checklist, which some find overwhelming, but most appreciate knowing in advance: http://www.getloans.com/purchasechecklist. Good luck getting to closing!

  7. Jeri says:

    We are going back and forth now trying to close escrow. We have a 11 yr old bk, and a forclosure 4 1/2 yrs ago. We got all the papers the loan officer wanted from us, then the underwriter wanted tax papers, BK papers and a trustees deed. We never got that in the forclosure process. Now our closing is not going to happen as planned and they are telling me “I” have to get a copy of the Trustees Deed, why can they not get that? they should have ways that I don’t. This happened in Calif 4 yrs ago, we live in Oklahoma now.. Oh and all the Income taxes way gave them, not good enough they want them to come from the IRS.. is this underwriter being overly picky?

  8. brianm says:

    Hello Jeri, I am afraid a lender would not have access to a trustees deed, for privacy reasons no one should have that or be able to secure it except for you. They would have to get that from you, and if you do not have a copy, there must be a lawyer or court somewhere that has that on file. I know that may be difficult to secure that document, but I am afraid that you have to get that instead of the lender. As to getting copies of your tax returns from the IRS, yes, sometimes an underwriter will ask for that, that is not a picky request, I can see them asking for that in a scenario where they are looking to approve a mortgage after a bankruptcy and foreclosure. The mortgage process is picky in general, I think in your case, it does not sound like they are overdoing it or looking for ways to shoot down your mortgage application. I think they are just asking for things that they truly do need. Good luck securing all that they want.

  9. Bryan says:

    We are waiting on our new house to be built and have already sold our other house. Why do underwriters care where the “source of funds” used for closing on the house we just sold? Also we are staying with my in-laws (awesome right) until our house is done. Why do they want to know an explanation from us where we are currently living since sale of our prior home?? These seem very trivial…

  10. brianm says:

    Hello Bryan. The source of funds is important for lenders because of the Fannie Mae/Freddie Mac/FHA/VA rules related to allowable assets. If a lender sees non-payroll deposit, they are going to want to know where it comes from to make sure that you have not used assets that are disallowed, like cash advancing a credit card, or borrowing money from a friend. For more detail on source of funds click here.

    As far as wanting to know where you are living, they need to know this for two reasons. One, all of the entities that write the mortgage guidelines require that lenders string together a two year consecutive residence history. It is simply a mandatory requirement. Two, they need to make sure that you are not residing in a home that you may have a mortgage on that should be counted into your debt ratios. There may be a mortgage that does not show up on your credit report, or there may be a property that you own free and clear that has property taxes and homeowners insurance that needs to be counted into your debt ratios. Or maybe you have rented a home, and plan to continue to rent it for some reason after you settle on your new home. All these things may potentially affect your debt ratios, and they have to document where you are living to make sure there is no other expense they should be adding into your debt ratios.

    I hope that answers your questions, good luck with the rest of your process.

  11. Kyle says:

    I’m sorry, but I find this completely absurd. I’m in the process of getting my mortgage underwritten and I have been asked for the most stupid of things, things that were never asked for in the first place nor things that would ever be thought of.

    The most insensible of them was a statement to verify that there is equal access to a bank account with my name on it. If you have the bank statement directly in front of your face with my name and another’s name on it. Why would you not know that there is equal access to a joint account. Underwriters lack serious common sense it seems. Why would my name be on anything that I do not have access to when it is an asset? Furthermore, where did this persons education come from because they obviously lack any form of intelligence.

    Now how is this last minute document among other ridiculous documents something that I would know to give in the beginning. Underwriters ask for things at the last minute and that’s a fact.

  12. brianm says:

    Hello Kyle. I am afraid the request they made in this case is logical. When a bank statement shows another party on the account, that means its a “joint account” and that one party typically can’t arbitrarily withdraw the money for their own, singular purposes, since its a joint account. So the Fannie Mae/Freddie Mac requirements call for a lender to get a letter from the other party confirming its OK for you to withdraw the funds for a home loan. Note that I said these requirements, as all mortgage underwriting rules, are Fannie Mae/Freddie Mac requirements, not lender requirements. Lenders do not write the rules, Fannie Mae/Freddie Mac does. So the real complaints for these rules should go to Fannie Mae/Freddie Mac requirements, but this one they are asking you for is actually logical. Now the lender may be guilty of asking you for a letter from the other party on this account, if you gave them the bank statements 3 weeks ago, and they are just letting you know now that they need this letter explaining its OK for you to withdraw the funds. But if you just gave them the bank statements a few days ago or a week ago, they do need time to put those statements through a review process, and asking you for this explanation at that point sounds completely reasonable.

  13. Maureen says:

    I’ve settled over a month ago. Am living in property. Apparently, at settlement I signed and agreed to provide docs AFTER closing. The loan officer is particularly harassing asking for explanations on tax returns which I have no answer. Wen does it end? I’m at the end of my rope. This LO has been horrific to say the least the whole time. Any answer besides I signed the doc so have to provide? This cld go on forever!

  14. brianm says:

    Hello Maureen, that is a standard form that Fannie Mae, Freddie Mac, FHA & VA require the consumer to sign for all lenders. In case a lender misses something in the underwriting of the loan, they reserve the right to come back and ask you for it. It is sloppy to miss something, and then ask for something post-closing, but it happens in a rare occasion. If they are asking questions on tax returns I can understand that is particularly frustrating, since those sound like high level income questions that definitely should not have been missed up front. But, know that the loan is settled, your terms cannot change, and you are only trying to help them complete the loan documents to make sure the loan is saleable to whatever agency they are going to sell them to, and that it is something you do need to try and do. I hope it ends soon 🙂

  15. Aaron says:

    I think the entire underwriting process is completely absurd. everyone is getting penalized for stupid mistakes made by few in the industry. Now the Government( FM and FM are part of the Govt) dictates and we have handed off to them . My underwriter wants me to submit a copy of the title of the car which I owned and sold to CarMax a month ago ! I told then that the Texas law mandates the title goes with the car and I don’t have a copy of that with me. Those guys are so accustomed to disbelieve statements that I had to search my pile of paper and luckily found a copy of the title. God save this industry

  16. brianm says:

    Hello Aaron. I don’t know that the “entire” underwriting process is “completely” absurd, but I do agree that the industry is at the height of rigidity, its as bad as I have seen it in my 27 years in the business. And I think the issue with the car title is not that it was asked for, but that you were not prepped for it early on. When you discussed your loan application with your lender up front, they should have asked you thorough details on where you got your down payment from. They should have determined on day #1 that you had sold a car, and that someone would need to go to CarMax to get the title and possibly some other paperwork. As you said, luckily you had a copy. But the backup plan would have been going to CarMax, it still would have worked out had you not had it. The bottom line is that the paperwork is the most thorough its ever been, and all of us need to work with lenders that are detail oriented and experienced. Let’s all make sure we start to think about that when we shop for things, it seems most of us solely shop price, and in a very complicated financial transaction, it pays to also consider experience and execution. A more experienced lender would not have surprised you with this down the line, a month after the transaction started.

  17. Eric says:

    Hello. Our lender requested many items a month ago. We completed all the forms and submitted them 3 weeks ago on Sept. 10th. We updated some of the information on the documents to reflect our latest account transactions and an update in the closing cost credit that the seller agreed to. We initialled the change on the paperwork.

    After submitting, i followed up numerous times and each time our LO confirmed the documents were received, and then submitted to the underwriter. They never asked for additional documents.

    We close in two days on Oct 3rd. On Sept 30 our LO told us that the closer cant get information from the title company that they requested and said we cant close on the 3rd if they dont get this information. I called the title company, they said our lender never requested any info. They said the lender can call or email. I called the lender, told them this. They called the title company and it was resolved in an hour.

    Then today, Oct 1, our LO told me that the closer just noticed the change in the closing cost credit we sent them on Sept 10, and said our closing date is in jeopardy b/c they have to reso the appraisal.

    It appears that at least in my case, the lender and underwriters waited to last minute to process our loan. Wen a borrower does submit all their documents early and on time, I believe it just sits in a queue while the underwriters rush to close the other loans that were being submitted last minute.

  18. brianm says:

    Hello Eric. Sorry to hear you had troubles. It does appear the lender missed some things until too late, this does happen on occasion. In general, I find that buyers are slow to send in the needed paperwork, and they take days and weeks to submit things that should take minutes, hours or maybe a few days; and then scream loudly at the end of the transaction when there is a delay, that they want to pin on the lender. However, it sounds like in your case you were diligent in sending things quickly, and they still dropped the ball.

    Loans do sit in a queue while the underwriters rush to close the other loans that were being submitted last minute, you are right. Even if you are an efficient loan officer, and happen to have an efficient client, your workflow is still affected by other loan officers who may be inefficient, who may be helping inefficient mortgage borrowers, and it gums up the works for everyone.

    All of this is hard to measure up front, but I will say this is a good story for people to read to hopefully give them one more reminder that shopping solely by price is an invitation to disaster. Alas, 99.89% of all mortgage borrowers shop solely by price, and do not take into consideration experience, size of team, systems, security of documents, turn times, relationships, reputation, etc. If I had a dollar for every time someone asked me for a rate quote, and then rushed me off the phone before I could discuss dozens of other things they needed to hear about to help them decide, I would have retired long, long ago.

    So for anyone reading this, take this story into account, ask a lot of questions about a service provider first, before even asking about price, and then decide. I can tell you, with a straight face, that with 27+ years experience, a team of 6-7 people that handle all my loans, a manager that does not allow loan officers to be inefficient otherwise they are fired, and a full time commitment to learn and grow in this complicated industry, your problem would not have happened on my watch.

  19. khalid says:

    Waiting for a clear to close for the last three weeks, processor submitted the file multiple times with the required documentation provided on the spot (for the entire loan application period), every time underwriter asked for something new that is not related to the prior requests, I have a feeling that the underwriter go through the file and when he finds something he stops there, marked that page in the file, requests that document and when he gets it he open the file again and continues where he has left,and on and on.That is why the day befor closing he came with three new requests and we have to postpond closing.
    I feel if the time and space permit I can write a book about this process of nonsense and redicule, which non of it is my fault, in the contrary I helped the lender to clear too many conditions in the comittment which are on their responsibility to clear, but they have hard time to get them done promptly.
    I can go on and on, my be I will elaborate more on my next response

  20. brianm says:

    Hello Khalid. I agree there are definitely times when a lender is the problem, and it is not the client causing delays, and it sounds like you are in one of those situations. This is a good lesson for all people to learn going forward, when shopping for a mortgage lender (or any service provider for that matter), we all need to stop shopping solely by price, and more by execution, experience, systems and turn times. I don’t think I have ever, literally, in what must now be tens of thousands of discussions with clients, ever had a client ask me about execution, experience, systems and turn times. It always seems to be about price. So let’s all start asking more questions related to things other than price, to try and ensure a better service provider and a more efficient outcome.

  21. Char says:

    Brianm – we are *hopefully* closing on our new construction in less than two weeks. About 4 weeks ago I provided what I was told was the ‘last document needed for the underwriters final approval’. I confirmed with my LO that she received it and did not hear anything else. Tuesday I received a call that my DTI is a smidgeon too high, and they have to pull some report (still no word) from credco to determine if the timeshare we paid off last month is enough to lower it. Any idea why this DTI issue didn’t come up back in July/August when they ran and pre approved my loan?? The home appraised just a bit higher than the sales price (yay!) but not a drastic amount to increase the taxes by a bunch (my assumption). Also, when I calculate my DTI, it is higher than they are saying it is, so I’m nervous they did something completely wrong and we now have to get rid of a vehicle or dip even more into savings to pay off a school loan. Any ideas on why this would come up so late in the game when my debts have only gotten better since pre-approval??

  22. brianm says:

    Hello Charlotte. There could be a number of reasons why this has happened. It is likely that the loan officer and loan processor did their own number crunching and a best estimate of your debt ratios, and it appeared OK at loan application. But the underwriter, whose job it is to be exact, may have found that the estimated property taxes the loan officer used were found to be higher when the title company reported the exact taxes later in the transaction. Or maybe you have a credit card that now has a higher minimum monthly payment than before. Or, if you are self employed, commissioned, get bonuses, or get any income that fluctuates; maybe the loan officer estimate of how much can be used from that sort of variable income was too generous and does not match what the underwriter came up with? Maybe the estimated homeowners insurance the loan officer used was lower than the actual? There are a number of things that may cause a variance in the final debt ratio. I hope they work it out, and you do not have to pay off anything else!

  23. Char says:

    Thanks for your response brianm.. apparently my first LO and UW decided to ignore my leased vehicle as part of my DTI…??? I don’t turn it in until July! They’ve been trying to verify a paid off timeshare (paid off 11/14) with credco since last Wednesday and decided to inform me last night at close of business that they need further documentation. Also, I have to close out my credit card because it still had a balance on it, but no minimum payment due to a large payment I had just made. Needless to say, I’m really looking forward to this process being over so I can speak my mind to these people. If we had been informed months ago that there was an issue with my DTI, we would’ve addressed it months ago.

  24. brianm says:

    I wonder if they thought the car lease was a car loan by mistake? And on installment loans that have less than 10 months, you usually do not have to count those. So maybe that was one oversight, and then when they realized it was a lease, and it has to be counted, that is where the problem comes from. With a car loan, the lender would know that after your last car payment in July 2014, then there is no more debt and you’d own the car, so why count it in the debt ratio since its almost paid off. But with a lease, underwriters know a consumer will likely lease a new car, or have to buyout the current lease. Either way, with a lease, there is further economic impact when a lease has a few payments left, that is not the case with a car loan. It’s just a guess, but that may have been an oversight, and when they realized it was a lease and not a car loan, it sent them scrambling for solutions and other debt payoff to fix a debt ratio that was not as high previously since they were not even counting the car lease payment in the debt ratios. Either way, I hope it works out, and you wrap things up as smoothly as possible. And one last note, it is these sorts of issues I wish I could preach to other consumers in advance, that they need to check on when “shopping” lenders. I am not sure how this lender was referred to you, or if you found them on your own, but most consumers only check price when shopping for things, and don’t consider experience, service, systems, execution, team, financial backing, etc. All of us need to take a harder look at service providers, to try and avoid problems like these.

  25. Tom says:

    “Client: Why do you wait until the last minute to ask us for this stuff?
    Loan Officer: Why do you wait until the last minute to give it to us?”

    As a “Client”, I can say that I give the lender what he asks for, when he asks for it. If the lender is asking for things at the absolute last minute, I can only assume he forgot to ask me for something earlier in the process.
    My lender recently said to me “As long as you have turned in everything we asked for, you’ll be fine.” This, after several issues and delaying the COE. I’m sorry, shouldn’t YOU be the one to know if I have turned everything you require?

  26. Liz says:

    This is the 9th time Ive been involved in a mortgage, we have excellent credit, and I have NEVER seen anything so absurd in my life as what we are having to provide. Right down to provide three bank statements showing my SS check going in but make sure you include the last page of the statement that has no transactions and is just printed on every statement at the end, and include the statement that was in sequence that didn’t have a SS check deposit (because there were two on the previous statement). Cashed in an IRA for the down payment – oh the deposit in the bank was $120 less than the statement from the company that held the IRA showed they gave us – have to have written explanation and copy of the check we deposited (sure hope the credit union made a copy)- I feel like we are looked on as criminals at 64 when I haven’t even had a speeding ticket since 1982!

  27. Nick says:

    I’m in the process of a 40 day escrow and was supposed to close today. They out of know where they started asking for a bunch of things 5 days ago and surprise we aren’t closing today. The appraisal was done 25 days ago. No contact from our lender till 5 days ago. I’ve now had to reschedule all kinds of services I had setup. We’ve been quick to respond and ask when we will close and they never answer that particular question. It’s not always the client.

  28. brianm says:

    I agree Nick, its not always the client. I did not say it was. But its important to do several things to avoid this:

    1. If you are on top of getting the lender documents, keep asking them for the “clear to close”, and if they can’t give you that, or can’t give you an ETA on that, ask to speak to a manager.

    2. Do NOT (and I am not saying you did, but most people do) shop lenders solely by price. Ask about:
    a. Years of experience.
    b. Size of team (how many people are supporting the loan officer)
    c. Estimated turn times for loan processing, appraising, underwriting, clear to close, and preparation of closing docs.
    d. How many loans the loan officer has closed that month, that quarter, and that year, and the prior year. If a loan officer is not doing at least 4 deals a month, minimum, I am not sure they have enough experience and engagement to properly manage your transaction.

    3. Learn as much as you can about the loan transaction, and ask a lot of questions. People may learn a lot by going through the notes here: http://www.getloans.com/blog/tools/loan-tracking/

  29. James says:

    Our loan processor has sat on his butt for a month. He doesn’t respond to phone calls or emails. I can guarantee just before we are scheduled to close, he’ll find some problem that will cause us to close late. Whatever happen to customer service. These people are supposed to be the professionals. They’re supposed to provide their customers with information, a good product, and quality service. They do it because they can get away with it.

    I would like to know tips that will actually encourage a loan processor to hussle. For example, should I seek out another loan? Threaten to close later? CC someone on email communications? What can help?

    Thanks in advance!

  30. brianm says:

    Hello James. Thank you for the inquiry. If your loan processor has been unresponsive for an entire month, yes, that sounds like it might create problems. Maybe they are incredibly efficient and the loan approval will come back clean with no loan approval conditions and in plenty of time to close escrow, but it would be nice if they would communicate to you along the way. I think I would find out who the branch manager is there, and CC them on all email communications. I would also email the branch manager directly, separately, and explain that you have not gotten any communications in a month, and that you are concerned that you are going to miss deadlines. Trust me, when you get a branch manager involved, your results should change 🙂 Good luck.

  31. Garrett says:

    This industry is ripe for disruption… such an inefficient and random process.

    A Chase underwriter is currently holding up my ReFi because I can’t prove I don’t own properties owned by people with the same name as me. Huh? So if my name was John A. Smith I’d have to prove this for 1,000s of homes across the country?

    I now have to confidence in this underwriter or Chase. And feel this is self serving delay to prevent me to ReFi at a lower rate and even have to pay penalties for missing the “lock” target (BTW this is their made up date.)

    Background: I have excellent credit, have made every payment (at the higher rate) for the past year and have no change in employment (other than a raise in salary).

    Anyone have any ideas?

  32. brianm says:

    Hello Garrett. I think you are right, the industry is ripe for disruption. It won’t be though, because its too mired in compliance and rules, and very overburdened by regulation. Its impossible to disrupt right now. BUt I hope it is someday.

    I don’t think it is self serving, as they have nothing to gain by not closing your loan. Revenue is made when the loan is closed, not by delaying people. I promise you that there is not a grand conspiracy at a massive institution like Chase to single you out to charge you a higher rate. Its too much effort for a tiny reward, and it risks a lawsuit. The delay is simply they must have found your name in a database that suggests you own a certain property. Do you not have any affiliation with the property at all? Ask the loan officer and underwriter to give you some ideas of what you can do, there must be an alternative to prove this. Ask them what database they found this property in, and then ask the people that run the database how your name got attached to that property.

  33. Deb says:

    I just closed on a loan and the people whose house we were buying were supposed to close on theirs the following. In BOTH instances we had submitted every thing the underwriter had asked for weeks earlier and closing dates had been set. In BOTH instances the underwriter (days after giving the okay) requested IRS documents HOURS before closing. Luck for me, I had refinanced my house the previous year and had the documentation. The people I was buying from weren’t so lucky and weeks later are still waiting. They have over 50% down and excellent credit. That loan isn’t going bad and the underwriter knows it. In the meantime they may lose their house.

  34. Angie says:

    All the information above is very helpful. However, being a first time homebuyer, it is VERY stressful waiting during the loan approval process. I am set to close on a house June 12th. I have turned all my paperwork in and have provided documents in regards to requests for more information from my LO within minutes. That said, in the day and age of immediately available information, why is there not a portal available for those waiting on loan approvals? Somewhere I can log in and see my loan status i.e. waiting on paperwork from buyer, in underwriting, waiting for appraisal, etc. It took this group 2 weeks to get my approval. Since then, my loan packet has been with the underwriter for a week. I’m going out of my mind not being able to or wanting to prepare for my move until I know for certain my loan is “Cleared for Closing”. Bottom line, as a buyer I would really like better communication between the appraiser and my LO and the underwriter and my LO which in turn would flow down to me.

  35. brianm says:

    I agree, sometimes it would just be nice to have regular updates so you didn’t have to sit on pins and needles. If you click here, that is why I use this loan tracking system to give people an idea of where they are in the process. Most people don’t do this, but I think the technology is there that everybody should be able to do this. Good luck getting things done on time, I think you’ll be fine.

  36. Chris says:

    We’ve been stuck past the title work received for over a month now.

    Tis a Freddie Mac loan. Excellent credit, large downpayment, plenty of income on a measly $180,000 loan in CA.

    Through this whole ordeal, the lender has lost 2 loan processors (working on the 3rd), and 3 weeks before closing needs tax transcripts. They ordered the next day. Mine came in, my wife’s did not. Said they got lost. Ordered again, finally came in 2 weeks later. Now we have to wait an additional 5 days for FM to “approve them?”

    This whole tax transcript thing ate up 40 days of our time. We’re now not going to close and our rate lock expires. Now they want another $300 to extend it till monday and say they’ll eat anything after that.

    They gave me a $300 credit for closing (of course quoting they shouldn’t have but have to since they failed to disclose a charge) but now that credits all but evaporated, should I just walk?

  37. brianm says:

    Hello Chris, I’m afraid it sounds too late to walk. You’d have to start over a new lender and that would take a long time. I think I would just stick with the lender that has not performed very well, and hope they get it done, and hope that they really do pay for any other rate lock extension that is required past next Monday. Good luck.

  38. Christopher T says:

    Hi,

    Okay so I’m experiencing a lot of the things that these people are talking about in the blog. For me my loan officer has last requested for a letter of explanation they then asked for a rental verification that came back already then he came back and told that he needed to update my credit because the dispute was on there after I already did a credit supplement to update that information now we’re waiting on the loan officer to or the underwriter to approve the letter of explanation and to update the disputes does this sound right what do you believe will be next in this process.

  39. brianm says:

    This sounds right to me. The next step should be the underwriter reviewing everything and giving you a loan approval. It sounds like things are taking a normal and logical course. Good luck.

  40. aung says:

    Hi,

    So we are scheduled to close on our home loan in 8 days (August 6th). We originally submitted all of our paperwork/mortgage app back on June 24th. In the meantime of June 24th and July 13, we had been calling the our Loan Processor to see if all paperwork we submitted was correct. Our loan processor NEVER called us back so we assumed we were all set. On July 13th, ae have to submit a “Mortgage Inquiry Letter” for the past 90 days asking if anyone had pretty much run our credit. We created our own letter because we were never told that this “letter” had to be on a certain form. Today, 8 days before closing, we get a list of 16 different conditions of which need to be satisfied. One of which was this “Mortgage letter” that appparently had to go on a certain form– as well as other paperwork that was submitted with the original mortgage application that was on the wrong form. At this point, we still have not spoken woth our Loan Processor and the only way we know about these conditions that we need to meet is via email. Half the stuff i dont understand so i call my LP back and she still doesnt answer. The only way I ever found out what specifically would satitsfy the conditions requested by the underwriter was by asking to speak to a different availabile loan processor.

    Are we going to close on time?!? I plan to submit all these conditions by tomorrow.

  41. brianm says:

    It sounds like what you are suffering from his incredibly poor communication. I would contact the branch manager and demand more open and constant communication through settlement. At this point you really need it. Good luck.

  42. damyon says:

    Im a seller. I Received an offer with a full VA approval. Closing date was set and all of a sudden extension requested due to buyers obtaining lower insurance which was provided. At new closing date underwriter asking for tax returns for 2015 which cannot be done as we are still in 2015. buyers have given all docs requested including profit and loss statement requested at last minute. Closing date arrived and still no answer. Due to this situation, i am now financially underwater from doing repairs, obtaining storage, app fees for new place, etc based on lender advising will clear for closing by end of day only to have something new. when you are fully approved from the beginning with an approval letter, shouldnt it be assumed that buyers have provided all needed dos ahead of time. i wastold VA Requires residual income of a certain amount and that the buyer are $100.00 short. what can i do about this. Im already on second extension and now financially underwater due to this.

  43. brianm says:

    When you say that you had an “full VA approval” that would mean that you had a commitment letter. But I’m guessing that you had a preapproval letter instead? Usually when someone makes an offer they have not been through the underwriting process and obtained a commitment letter, especially on a VA loan. The bottom line is that the lender and underwriter are allowed to ask for whatever they want all the way up until the settlement date, even after a clear to close is issued they can ask for something. So I’m afraid the buyers are going to have to continue to try and correct things and meet the lenders requirements. Good luck.

  44. damyon says:

    Thanks for the info. Problem here is underwriter requirement for stamped tax docs that seem they cannot get until IRS opens tax filing. Taxes can be done, however cannot be filed. Its kinda confusing to request something that possibly cannot be done until next year for a loan that has already been extended for 2015.Letter from lender stated loan approved. Not pr-approval or pre-qualified. this was reason contract was accepted. ???? Thanks again.

  45. brianm says:

    Even though they may have sent you a loan approval, until the loan is “clear to close” they can ask for anything in addition. And the timing doesn’t really matter to them, if they have a document that they think that they need, they can’t help it if it’s going to take the IRS time to provide it. I am afraid you are going to have to try to keep extending things until the buyer can provide what they want. Sorry it is such a hassle, but this is the current state of the mortgage industry.

  46. ErinLew says:

    I am just happy to hear that I am not alone in feeling this process is ridiculous. Although, I do feel your article is more demeaning to buyers than informative, I understand your frustration as a service provider. I am currently in the home buying process for the first time and because I was warned about the extent of the documents needed, I tried to provide everything I thought they might ask for upfront and early. Including things like proof of payout from a car accident I had recently. However, being upfront did not help because my loan officer asked me not to provide the proof of where the deposit came from until I was asked for it. My father is 70+ years old and a home investor and is shocked by the amount of intrusive and trivial paperwork requested. As a Millennial home buyer the distance back in which they are asking for information is getting close to my college years. I certainly hope not to be penalized for situations from when I was significantly less financially stable. I thank you for having this forum to post because it has made me feel better about the frequent having to step away from work to supply more documents. (A job in which I will obviously need to keep!) I found this article because I was frustrated and wondering what the deal was. Please keep it posted, as it will provide solace to those of us in the process. I also thank you for mentioning who to start contacting about this. I plan to follow through! This cannot possibly be improving the state of our overall economy if people are too intimidated to buy. It’s simply making the rich richer (real estate investors) and the poor poorer (us millennials and all renters).

  47. brianm says:

    Thank you for the input Erin. It is an incredibly frustrating situation for all parties. I can assure you that with over 30 years experience and well over 5,000 transactions that I’m just speaking based on facts, and I don’t mean to demean anyone. And I can tell you that much of the time buyers are putting themselves in their own jeopardy because they don’t provide things in a timely fashion. I’m sure there are service providers that are contributing to the problem and are disorganized and causing buyers pain, and homebuyers should be more careful and pick service providers based on reputation, service, experience and other business metrics. At the end of the day a mortgage company could also do a better job in preparing you for what is needed, and pressing you to meet your obligations and keeping you organize. That’s the mark of a good mortgage company. And some mortgage companies don’t help to keep you organized, don’t present all of the requirements that are needed in an efficient fashion early on, and they can certainly help cause the mess. It’s just another good illustration of “buyer beware” and to ask a lot of questions before choosing a service provider.

  48. Lazy4crazy4 says:

    After everything seemed ready to go, the UW requested a “well maintenance agreement” for my 4 party shared well, for my cash-out refi. They said if I don’t have it, I need to get one. In 22 years my neighbors and I have not needed an agreement to work on our well and none of my neighbors want to sign it. They keep saying that they refinanced and didn’t have to get one so they think I should get another lender. This is the only thing holding up the loan and I don’t see how I can provide something that is based on the personal will of my neighbors. Is there anything I can do about this?

  49. brianm says:

    If you’re new loan is going to be a Conventional or FHA loan then you should not need a well maintenance agreement. If it is a VA loan that is another thing. But typically on a Conventional or FHA loan, unless the appraiser calls for a well maintenance agreement, which is not normally the case, this should not be called for. I agree with your neighbors who say to find another lender. But when you go looking for another lender, bring this issue up in advance, so it doesn’t become a last-minute problem again. Good luck.

  50. Poppy says:

    Hello I’ work in the industry and I must say that the biggest problem I run into (esp with millennial buyers) is that they expect the bank to do everything for them. Today I spoke with a customer who expected to close on his Fha purchase in five days. I had no signed loan disclosures. I asked if he had them and his reply was “I didn’t know I needed to sign them.”
    He had them for over a month!!!

    He also wanted me to choose his insurance agent and attorney for him. He was completely clueless. If you cannot figure these things out for yourself then you shouldn’t buy a home. Borrowers you claim to be adults them please act like it. I can tell you what is needed but I can’t get it for you.

  51. Q says:

    I’ve had my loan go into underwriting 7 times and 2 extension. 4 days before closing they need more paperwork which they get the same day. Today is 4 days before closing and was told i will get feedback from them talking to the underwriting or processor only to be told by LO, they still working on paperwork and have to recalculate my loan. So now it looks like a 3rd extension (if the seller will do it at this point) and the 8th time it will have to go into underwriting. Why can’t i just the truth what’s going on! Please explain someone. This is blowing my mind and nerves!

  52. brianm says:

    Wow, that is a horrible story. Sometimes you get a horrible lender, and it has nothing to do with you. Sounds like that may be the case with your story. Don’t be afraid to complain and ask to speak to a manager, and keep going up the chain until you get satisfaction! Good luck.

  53. fiyahj says:

    Ok! Well been trying to get my cash out FHA refi done for two months now. I was very quick to hand in everything on my end and even obtained stuff they where having a hard time getting quickly. Something keeps coming up, last month request from Title company led to blowing FHA deadline. Everything was suppose to line up this month after a few smsll things. However, another request form the Title company blew the FHA deadline again. What is this deadline? I cannot find any info on this anywhere. I would really appreciate it.

  54. brianm says:

    It sounds like the title company is the culprit in your delays, and not the lender. So the title company should be blamed separate from the lender. However, I think what they are referring to as “the deadline” is the fact that if you’re paying off an FHA loan you have to usually pay an entire month of interest. So you want to settle an FHA loan near the end of the month, not early in the month or not midmonth. Maybe they can’t do it this month because of the Thanksgiving holiday? You’d have to ask them for specifics, but I believe this is what they are referring to. You should also ask them when your lock-in expires on the interest rate lock-in. Good luck.

  55. LZH says:

    Hello,

    Im just quite concern with app process. I have turned in everything pretty quickly within a day or less. But bc i work for family i got requested two verification letters, payroll ledger, taxes, w-2 for three years. I had approval conditions but none of the additional things I sent to them were in the email. My extension has been applied four times for an additional 2 months and Im just starting to get alittle discouraged. Whatever was requested of me to do for any finances I have accomplished it. I dont know what else they can possibly ask from me, Im just trying to understand how much longer should be required of me going back and forth?

  56. brianm says:

    Hello, I’m sorry it sounds like you’re having troubles and delays. It sounds like you’re giving them everything they have asked for. I can’t really answer how much longer it’s going to take. I would ask them that, and if whoever you’re dealing with doesn’t give you a sufficient answer, ask to speak to the branch manager. Good luck.

  57. Gyasi S says:

    Hello. My wife & I ran into a problem with our mortgage underwriter, who at one point told us that the rent my mother, who is our cosigner, doesn’t pay for where she lives didn’t need to be included in our application, as my mother’s husband pays directly from his pension account. The underwriter recently learned from his higher-ups that his advice was wrong & that the rent must be added, on the speculation that my mother’s husband may pass away, or separate his account in some refusal to pay rent & now demands paperwork to support their rent being included. This is really a last minute twist, days before closing & I cannot get this paperwork. Why shouldn’t I be angry?

  58. brianm says:

    You should definitely be angry! 🙂 When I wrote this article originally I didn’t mean to suggest that every single time there is a delay it is the consumer’s fault, just that many times they are at fault and won’t account for their own slow actions. But it sounds like in this case it is not your fault at all, but the lender’s fault for not understanding their own guidelines. And that is a big problem.

    I would asked to speak a branch manager, or somebody in a supervisory position, because something does not sound correct. I think what they are suggesting is wrong. We are told you specifically cannot discriminate against one’s age. For them to assume that somebody elderly may pass away is ridiculous. I’d push back on that, especially given that they’re telling you this at the very last minute.

  59. roger says:

    I am going through this right now. My loan officer said I was johnny on the spot with paperwork. I have zero debt, a good job, and 800 credit score. Yet still a ton of ridiculous questions…. Why do these address show up under your name. Well I sold them pull the records. Why are you moving so far from your work. What is it to you? Blah Blah Blah. Oh can we have $500 of good faith money before we require 100 more documents. It’s the process thats jacked. If a good down payment and a good credit score with no debt doesnt to the trick then maybe there is a system problem.

  60. iechicks rock says:

    Wow! This is awesome to read but disturbing that this has happened to any of us. I thought that my husband and I were being targeted by the Lender. We are in the rollercoaster Stage of the Underwriter process and we live in California but we purchased our home in Arizona. It’s been a huge headache and just an emotional rollercoaster.
    My husband and I have the world’s worse Lender in the world, so I believe. She never explained anything to us about the home buying process, but I thank GOD I did my own research. My Lender sends us emails with the Subtitle “CONGRATULATIONS YOUR LOAN WAS APPROVED” but then we always receive an email following, asking for more documents.
    Trust me, I have caught this lady in over 10 lies and again, I am thankful that I am very organized because I always seem to bust her out with her own emails, text, papers she has sent us, but it’s getting old and I think we’re going to file a DISCRIMINATION CHARGE. the reason being the lies, and the fact our agent is on our side. It’s a real shame that people with authority can use it in such a horrible way. This is a HIGHLY DISTURBING SITUATION IN THE HOME PURCHASE PROCESS that needs to be addressed ASAP. I wish you all the best!

  61. brianm says:

    I have definitely seen it where the lender is the source of the delays! But what the lender should have told you is that, “congratulations your loan is conditionally approved”. That means it’s approved but there are still some more things to provide. I think if you stay on top of them, you’ll get through the process. Good luck.

  62. Kate says:

    I’m glad my loan officer asked for all the documents with the application. He was in constant communication with the underwriter about our application so he could submit everything. We even submitted letters of explanation. I’m sure there is more that he could ask for. But I’m grateful my loan officer wanted as much paperwork as possible before sending it to the underwriter. They told me that I should have heard back by Wednesday. But I haven’t heard anything. I don’t know if that’s a good thing or a bad thing.

  63. brianm says:

    A slight delay is no big deal, they may just be backlogged. I’d check in with them if you have not heard by Friday AM though. Good luck!

  64. Sarah says:

    My husband applied for a loan and was quickly pre approved back in Nov. We have signed a buyer’s a agreement to have a modular built, provided all the w2s, paystubs, prof of income for down payment, etc. Once a week they require something more. Just today the processor told us we don’t have enough assets. She wants us to have $68,000 in assets which is 40% of what the loan amount is after our 20% down payment. We are first time homebuyers how can they expect us to have that much in assests? His credit is in the mid 700s, he doesn’t have any history of defaulted loans, bankruptcy, or disruptions in work history. We’ve had 4 seperate family members buy houses in the last few years and no one else has been told they need so much in assets. Now we don’t know if we should start the process over with a new lender.

  65. brianm says:

    Hello Sarah. We don’t do loans for modular homes, so I can’t really speak to the lenders requirements. My guess is that they are looking for extra cash because they want you to have “cash reserves”. Modular homes are unique type of financing, and they may just want significant cash reserves to make the loan approval. I’m not sure. I would talk to your loan officer and have a frank conversation and ask why there is such a significant amount of cash that they are trying to document. Good luck.

  66. Tb582 says:

    Man – things seem to have sure changed since I bought my first house in 2009 here in NJ. Now for about the past two months my wife and I have been working with a lender…. fast forward we are now two days away from our closing and are lender is still “working” on getting the underwriter sign off.

    Don’t they realize we have movers, lack of things in the current house, utilities scheduled etc!!! It’s completely infuriating that lenders and underwriters don’t seem to have any sense of urgency or need to get things done ahead of time for peace of mind.

    It’s crazy! Truly – here’s hoping the lender gets the clear to close tomorrow in time for closing on Friday!

  67. First time Buyer says:

    As a client who is in the middle of this process and getting incredibly frustrated, I can see your point that the loan officer isn’t at fault. But man, from my limited experience and perspective. This system is awful. Why on earth are people expected to make life changing decisions, give up current housing, and plan while someone in the background is still deciding our fate two weeks before moving? It’s terrifying. And for anyone who isn’t approved, probably devastating. Underwriters May be more expensive, but my opinion would be that people should’ve required to have already been through underwriting with the only conditions being a credit check at the end and details having to do with the property before getting a pre-approval letter. Because what I’ve learned since this began is that letter actually doesn’t mean much.

  68. brianm says:

    Good to hear from you Katie. I do think that a big part of the mortgage process is obviously related to the lender and it’s own operations. And there are certainly some bad actors out there who have a poor process, who cause the problems. It’s not always the consumer. That just goes to show you how critical it is when you choose a mortgage lender not to solely shop by price, but to also ask questions around their operations, experience, and efficiencies. Good luck getting things through more smoothly. Check in with any other questions.

  69. Ana G. says:

    im a bit frustrated as well with process and actually just truly believe lack of communication because I email the processor and get no response. I email sales consultant from the new construction site and says she is working on my file. I don’t understand why is it so hard for the processor just to respond and let me know the process. I removed a dispute from my report she reported Credit everything went well then it looks like the dispute I remove they ended up selling in the process now showing as a new dispute had to write a letter of explanation and told me not to worry but it’s been five days and have heard nothing I have emailed her after three days and still have not heard anything and wondering if I should call or email now but I would like to know where I am with this letter of exclamation it’s just frustrating that she just can’t respond to the email and let me know that she’s working on it or has not heard

  70. brianm says:

    Hello Ana. I definitely think the lender can drop the ball sometimes, and that it is not always the consumer. I would call your lender and ask to speak to the manager, and explain the communication has been slow to non-existent, and ask for help. Good luck.

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