No Escaping Mortgage Guidelines

November 10th, 2016

brian-martucci-underwriters-referees-mortgage-blogThere’s no outsmarting or escaping the mortgage guidelines upheld by underwriters, no matter how much income or assets the buyer has. The purpose of the underwriting process is to check the loan applicant’s credit, financial capacity, and the collateral. The underwriter’s main purpose is to make sure everything in the application meets the loan’s guidelines that you are applying for, whether that be from Fannie Mae, Freddie Mac, FHA or VA.

The mortgage process is like a Pandora’s box. Even if you send in all documentation up front, the paperwork will still go through various levels of reviews by loan officers, loan processors, and ultimately the underwriter. You’ll be asked for additional documents as some documents spawn questions that require supporting documents to answer questions caused by the original documents. You’ll also need to send updates to older documents as the process evolves.

Read more about what happens when you wait until the last minute to submit your documents.

Unidentified Mortgage Documents

I have clients that say, “I sent in all the documents you asked for, are there any documents missing?” That is almost impossible to answer on day one. My answer is usually, “Not that I know of. At this point the loan will be reviewed by my assistant and he may find something missing in the documents. After the initial review, within a couple of weeks the loan will get assigned to a loan processor who will do a third review. And after that of course the loan is submitted to the underwriter who makes the final approval decision. The underwriter lets us know if they see anything that we all missed. So there are different layers of review going on throughout the process.”

With mortgage documentation it’s just not possible for a loan officer to tell you everything that is needed upfront on day one. The only thing a loan officer can do is ask for everything they might need for your application. The mortgage guidelines are dense with hundreds, even thousands of pages. It takes a whole team to make sure that sufficient paperwork is in the file and meets the requirements of Fannie Mae, Freddie Mac, FHA, orVA. And each bank or lender may have their own mortgage guidelines that constantly change and update.

It is a complicated and onerous process that will never be easy…unless you have had one salaried job, with one bank account, no large deposits to explain, a high credit score, no business income outside of your salaried job, no rental property, no unreimbursed business expenses, no gaps in your employment, no K1’s, no recent job changes, no credit hiccups, etc.

How to Speed Up the Approval Process

Since everyone’s financial history and information are different, every mortgage application is going to be different as well. No one mortgage is like the other, because it is as unique as the individual/s who apply. Though there is a way to make it faster in some cases.

Get Organized

Start out by creating a new folder on your computer or an online storage solution like Dropbox or Google Drive for scanned documents you submit electronically or may receive from your loan mortgage lender. Try to keep all the files organized and easy to find.

Mortgage Checklist

It would be very beneficial for you to follow a checklist that will help you gather all of the financial documents you need. A detailed Purchase Checklist will refer to both employed and self-employed individuals that outlines what paperwork is required.

Dot Your I’s and Cross Your T’s

Be detail-oriented. If you are not good at details, then enlist a family member, friend or an assistant to help you with the application process. Read the instructions, do a thorough review of all paperwork, and check against the mortgage checklist. Take your time and do not rush through the details. It’s very important to sloooooooow down to avoid mortgage process mistakes.

Quick Response

After all required information from the checklist is submitted, the loan officer or underwriter will review it. It is highly likely that they will ask for additional supporting documents. When your loan officer asks you for the paperwork try to get it to them as soon as possible. The loan officer will then forward it to the underwriter and they will need additional time to review.

Many clients can find this process very frustrating because the turnaround times are out of their control. The underwriter must review and make sure they have all supporting evidence that you are able to afford the home loan. Despite how irritating this process the underwriter’s job is a lot like a checks and balances system for the mortgage industry.

Another way this process can be delayed is because of your loan officer. Now if you waited to get your documents to the loan officer, unfortunately there is no time machine to make up for lost time. Yet there are some loan officers who may not be quick to respond or confirm with you. That is why it is very important to not only find the best loan officer to work with; it is also equally beneficial to follow-up with your loan officer to see if those documents were sent to the proper place. Then you can say you did everything to ensure your mortgage paperwork is properly handled.

Underwriting With a Lender versus a Broker

When it comes to the underwriting part of a loan process having a mortgage broker may delay you. With a bank, mortgage banker or direct lender there is only one degree of separation from the underwriter. With a broker there is two degrees. A broker gets their loans from wholesale lenders who have files submitted for underwriting each day from various mortgage brokers they work with. The broker has no direct contact with the underwriter and therefore cannot usually expedite a file as easily as a mortgage lender who has submitted a file to their own underwriter who they have a direct line to, as well as a relationship with.

Underwriters know how to use Google these days. They can fact check your application with the help of the IRS, MLS and Google. If you are not approved the loan officer will be able to review the reasons why the application was denied. This is a good time to find out if any of the information was incorrect or if any supporting documents were missing. Depending on your situation there could be several options to consider as a next step. A good loan officer will review and discuss any questions with the underwriter. But remember not to shoot the messenger. Our job as a loan officer is to facilitate the loan through the origination and application process, doing everything in our power for it to be approved by the underwriter. There may be issues along the way, and hopefully you’ll have a good loan officer by your side to address and solve them.

Related articles:

Derivation of the Term Underwriter

Explaining and Documenting Bank Deposits

Mortgage Underwriters Are Not Scary

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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